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Dividend Watch: Divi-Do Land


  • Media headlines have growled that dividends were dying or dead for most of the last three months.
  • Yet, few in the crowd of 'Divi-Don'ters' have bothered to chronicle the 'Divi-Doers.'
  • That's a shame because there is a splendid story in Divi-Do land.

On April 7, we made the following statement:

"We have long believed that dividends are the linchpin tying individual investors and corporations together. With stocks careening all over the place, it would appear that traders and speculators are betting that companies will break this bond. We believe the bond will hold and provide an undergirding to the overall stock market."

Early on, over 20 S&P 500 companies announced dividend cuts, mostly in retail, energy, and travel and entertainment. In late March, estimates of dividend cuts by some observers for S&P 500 companies were as high as 35%. But soon company after company began announcing that they intended to pay their dividends. But that wasn't all; a surprising number of companies announced dividend hikes. The table below shows the dividend actions of S&P 500 companies made from January through June 6, 2020.

S&P 500 Company Dividend Actions Through June 6, 2020

Companies Paying Dividends Paid

Companies Cutting Dividends

Companies Raising Dividends




So far 47 companies have cut, suspended, or omitted their dividends. That represents about 10% of the Index but only about 3% of total dividend payments. Wall Street now estimates that total S&P dividends for calendar year 2020 will fall approximately 2.5%.

The reason the percentage total dividend cuts for the Index will be small is the 146 offsetting companies that are hiking dividends. In addition, some of the dividend cutters, such as TJ Maxx (TJX), have announced they will reinstate payouts once they have assessed the damage from the quarantine. The dividend hikes have a median growth rate of almost 8%.

In analyzing the cash flows of hundreds of dividend-paying companies, it is clear many will be borrowing to pay their dividends. That would have seemed like folly in a time of such great

This article was written by

Greg Donaldson is Chairman of the Board of Donaldson Capital Management, an Indiana based firm with assets under management of $1.4 billion. He has been in the securities business since 1975 and has founded or co-founded three investment management firms. He is a member of the board of directors of Donaldson Family, LLC, and Donaldson Research Partners, LLC. He is also a trustee of the Pumphrey Foundation. Greg graduated from Purdue University with a BS is Economics in 1970. Greg is married with two children and resides with his family in McCutchanville, a suburb north of Evansville, Indiana.

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Comments (2)

FinancialDave profile picture
Once again $ cut has to be a bigger number than $ raised so not sure what all the "crowing: is about. It's also nowhere close to being over.
follow up article on the 146 that raised?
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