Political  Calculations

The number of U.S. companies acting to cut their dividends during June 2014 increased to 16 in June 2014, as the U.S. economy would appear to still be experiencing recessionary conditions. While that's down from the average of 30 companies per month that took that action during the first quarter of 2014, when the U.S. economy recorded an annualized real economic growth rate of -2.9%, it is higher than the 13 and 12 companies per month that cut their dividends respectively in April and May 2014.

Number of Public U.S. Companies Posting Decreasing Dividends, January 2004 through June 2014

Still, by comparison to the first quarter of 2014, 2014-Q2 was an improvement, somewhat reversing the economic momentum of the first quarter, although that momentum gained in April and May would appear to be losing a bit of steam in June. We think the reversal in momentum from the first quarter of 2014 might mean a solid annualized growth rate being recorded for GDP in 2014-Q2.

We're also noting a curious pattern with companies paying extra, or special dividends compared to previous years. The chart below shows what we're seeing.

Number of Public U.S. Companies Paying Extra Dividends by Month, 2004-2014

Given what we observe for each of the months in the years from 2004 through 2013, there is an especially large number of companies making special dividend payments in each month in 2014. Typically, companies pay out extra dividends when they have unusually strong earnings.

That was definitely not the case however with the first quarter of 2014.

Political Calculations

Political Calculations is a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics.

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