Companies Pay Record Dividends in 2022 Despite Dismal Year
S&P 500 companies paid record cash dividends in 2022 even as the index suffered its worst annual loss since 2008.
S&P 500 cash dividends this year totaled $564.6 billion, up 10% from $511.2 billion in 2021, according to data from S&P Global Indices. Another record for payouts is in store for 2023 even if the economy suffers «a full recession,» according to Howard Silverblatt, senior analyst for S&P Dow Jones Indices.
Rising interest rates and bond yields will continue to exert upward pressure on dividend payouts, according to Silverblatt. «There will be more competition for income,» he said. «There was very little before this year.»
Resilient corporate earnings and large cash balances have allowed companies to compete. S&P 500 earnings are projected to be down 3.5% in 2022 from the prior year's record, and Silverblatt estimates companies could weather a further decline of 5% in 2023 and still raise dividends.
Stocks have a ways to go if they're to match less risky alternatives for income. The S&P 500's aggregate dividend yield rose from 1.31% late last year to 1.78% in December. The 399 S&P 500 stocks currently paying dividends have an aggregate yield of 2.2%. Meanwhile, the yield on the 10-year Treasury note increased from 1.51% to 3.88% in 2022.
Several of the market sectors with the highest yields have escaped this year's bear market. S&P 500 stocks in the energy sector—up 58% year-to-date—yield 3.6%. S&P 500 utilities and consumer staples yield 3% and 2.6%, respectively, and are down just 0.5% and 2.7% year-to-date. On the other hand, S&P 500 real estate stocks yielded 3.5% and were down 28% year-to-date.
Next year's payouts are likely to receive a boost from some of the companies resuming dividend payments suspended
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