Today we're featuring a simple chart showing two streams of data published by Standard and Poor in their S&P 500 Dividend Report, showing the number of companies in any given month that have either increased or decreased their dividends per share since January 2004.
The potential alternate economic indicator is seen by a decrease in the number of companies that increase their dividends, and perhaps more significantly, the number of companies that act to cut their dividends, which is much less volatile.
Here's the chart:
Looking at just the number of companies that acted to cut their dividends since January 2004, it would appear that when there are 10 or more in a given month, it would seem to coincide with periods of time in which the private sector of the U.S. economy is relatively distressed. At least, that's what we see when we look at the most recent recession in the U.S., which officially began in December 2007 and continued through June 2009.
We note that the number of companies cutting their dividends didn't fall back below 10 until February 2010, but given the relative weakness of the private sector economy in the U.S. at that time, perhaps that should be expected.
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