The Dividend Doldrums

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 |  Includes: SPY
by: Ironman at Political Calculations

Since 2012's first-quarter earnings season ended, there has been very little change in the expected future level of dividends per share for the U.S. stock market:

Expected Future Trailing Year Dividends per Share for the S&P 500, 6 July 2012Click to enlarge

Is it really all that surprising, then, that stock prices have largely languished in the time since?

It's true -- aside from being pumped up by noise from the news and rumors of actions to prop up the failing governments of the eurozone, stock prices have basically just gone sideways since:

SP 500 3-month chart ending 6 July 2012Click to enlarge

In fact, stock prices would have gone lower if not for all the noise of central bank rescue rumors of fiscally failing nations in the eurozone. You can see that in the spike in our chart below for June 2012:

Accelerations of S&P 500 Average Monthly Index Value and Trailing Year Dividends per Share, with Futures as of 6 July 2012Click to enlarge

As for where stock prices are today, they're still a bit elevated. But as you can see in the chart above, they're pretty close to converging with where investors focused on the expected level of dividends for the first quarter of 2013 would put them.

But looking at that chart, a good question to ask is when will the expectations for dividends in the second quarter of 2013 begin driving stock prices. The answer, as best as we can tell right now, is sooner than you might think, and with much less benefit than you might imagine.

Which is all probably the best we can hope for in this summer of dividend doldrums.