NIPA vs. S&P 500 Dividends - Yardeni Research
Corporate Finance Briefing: NIPA vs. S&P 500 Dividends
Yardeni Research, Inc.
February 1, 2023
Dr. Edward Yardeni
516-972-7683 eyardeni@
Joe Abbott
732-497-5306 jabbott@
Mali Quintana
480-664-1333 aquintana@
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thinking outside the box
Dividends
Figure 1.
2000
DIVIDENDS IN CORPORATE PROFITS (billion dollars, 4-quarter sum)
1800
1600
Dividends
1400
All Corporations (1704.9)
Nonfinancial Corporations (988.0)
S&P 500 (562.9) 1200
2000
1800 Q4
1600
1400
1200
1000
Q3
1000
800
800
600
Q4
600
400
400
200
200
0
0
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Source: Federal Reserve Board, Financial Accounts of the United States, Standard & Poor's and Bureau of Economic Analysis.
Figure 2.
80
S&P 500 DIVIDEND YIELD 75 (trailing 4-quarter sum)
70
65
Invested in 1970 (77.6)
60
Invested in 1980 (49.3)
55
Invested in 1990 (20.2)
50
Invested in 2000 (5.1)
Invested in 2010 (5.3)
45
40
80 Q4
75
70
65
60
55
50
45
40
35
35
30
30
25
25
20
20
15
15
10
10
5
5
0
0
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26
Source: Standard & Poor's Corporation.
Page 1 / February 1, 2023 / NIPA vs. S&P 500 Dividends
Yardeni Research, Inc.
Dividends
Figure 3.
20
20
TREASURY BILL YIELD VS S&P 500 DIVIDEND YIELD
(percent)
15
15
Three-Month Treasury Bill Yield S&P 500 Dividend Yield*
10
10
5
5
Jan
Q4
0
0
46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26 28
* S&P 500 four-quarter trailing dividends per share divided by quarterly closing value of the S&P 500 index. Source: Standard & Poor's and Federal Reserve Board.
Figure 4.
150.2
125.2 S&P 500 DIVIDENDS & RETAINED EARNINGS PER SHARE 100.2 (dollars, trailing 4-quarter sum, ratio scale)
75.2
50.2
25.2 Dividends Retained Earnings*
150.2 125.2 100.2
Q4
75.2
50.2
25.2
.2
.2
46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26
* Reported earnings minus dividends per share. Source: Standard & Poor's.
Page 2 / February 1, 2023 / NIPA vs. S&P 500 Dividends
Yardeni Research, Inc.
Dividends
Figure 5.
100
100
S&P DIVIDEND PAYOUT RATIOS*
(percent)
80
S&P 500
80
S&P Industrials
60
60
40
40
Q3
20
20
0
0
100
100
S&P 500 COMPANIES PAYING A DIVIDEND
95 (percent of total)
95
90
90
85
85
80
2022
80
75
75
70
70
65
65
46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26 28
* Four-quarter trailing dividends per share divided by four-quarter trailing reported earnings. Source: Standard & Poor's Corporation and FactSet.
Figure 6.
150
150
DIVIDEND PAYOUT RATIOS (percent)
100
100
50
Dividend Payout Ratios
NIPA as Percent of NIPA
0
After-Tax Profits* (66.2) S&P 500 as a Percent of S&P 500
Reported Net Income(37.5)
Q3 50
Q3
0
-50
-50
64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26
* From Current Production. Including IVA & CCadj. These two adjustments restate the historical cost basis used in profits tax accounting for inventory withdrawals and depreciation to the current cost measures used in GDP. Source: Federal Reserve Board, Financial Accounts of the United States, Standard & Poor's and Bureau of Economic Analysis.
Page 3 / February 1, 2023 / NIPA vs. S&P 500 Dividends
Yardeni Research, Inc.
Dividends
Figure 7.
18
18
S&P 500 FORWARD EARNINGS YIELD vs DIVIDEND YIELD
(percent)
16
16
14
14
S&P 500 Dividend Yield* (1.74)
12
S&P 500 Forward Earnings Yield** (5.74)
12
10
10
8
8
6
Jan
6
4
4
2
Q4
2
0
0
79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25
* S&P 500 four-quarter trailing dividends per share divided by quarterly closing value of the S&P 500 index. ** S&P 500 12-month forward consensus expected operating earnings divided by S&P 500 stock price index.
Source: Standard & Poor's and Federal Reserve Board.
Figure 8.
18
18
THREE-MONTH TREASURY BILL YIELD vs. S&P 500 FORWARD EARNINGS YIELD
(percent)
16
16
14
14
Three-Month Treasury Bill Yield (4.53)
12
S&P 500 Forward Earnings Yield* (5.74)
12
10
10
8
8
6
Jan
6
Jan
4
4
2
2
0
0
79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25
* S&P 500 12-month forward consensus expected operating earnings divided by S&P 500 stock price index. Source: Standard & Poor's and Federal Reserve Board.
Page 4 / February 1, 2023 / NIPA vs. S&P 500 Dividends
Yardeni Research, Inc.
Dividends
Figure 9.
78001100
6010 5010 4010
BLUE ANGELS: S&P 500 INDEX AND DIVIDEND YIELD (ratio scale)
3010
2010
S&P 500 Index
01/25/23
1010
Blue Angels S&P 500 Using
Implied Dividend Yield*
1%
78001100 6010
5010
1/25
4010
2%
3010
3%
2010
4%
5%
6%
1010
10
10
45 50 55 60 65 70 75 80 85 90 95 00 05 10 15 20 25 30
* Blue lines show hypothetical values of S&P 500 stock price index using actual S&P 500 dividend (4-quarter trailing sum) divided by dividend yields from 1.0% to 6.0%. Source: Standard & Poor's.
Figure 10.
8030 7030
6030 S&P 500 INDEX AND DIVIDEND YIELD
5030
(ratio scale)
4030
3030 S&P 500 Index
2030
01/25/23
S&P 500 Blue Angels Implied Price Index*
1030
8030
1%
7030 6030
5030
4030
2%
3030
3%
2030
4%
5%
6%
1030
30
30
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26
* Blue lines show hypothetical values of S&P 500 stock price index using actual S&P 500 dividend (4-quarter trailing sum) divided by dividend yields from 1% to 6% Source: Standard & Poor's.
Page 5 / February 1, 2023 / NIPA vs. S&P 500 Dividends
Yardeni Research, Inc.
Dividends
Figure 11.
2000
CORPORATE DIVIDENDS: TOTAL vs S CORPORATIONS (billion dollars)
1800
1600
Corporate Dividends*
1400
S Corporations Dividends
2022
2000 1800 1600 1400
1200
1200
1000
1000
800
800
600
600
2017
400
400
200
200
0
0
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025
* Annual sum of quarterly data. Source: Bureau of Economic Analysis and IRS Statistics of Income.
Figure 12.
50
50
S CORPORATION DIVIDENDS
(as a percent of Corporate Dividends*)
40
2017
40
30
30
20
20
10 1991 1993 1995 1997 1999 2001 2003 2005
* Annual sum of quarterly data. Source: Bureau of Economic Analysis and IRS Statistics of Income.
2007
2009
2011
2013
2015
2017
10
2019 2021
Page 6 / February 1, 2023 / NIPA vs. S&P 500 Dividends
Yardeni Research, Inc.
Dividends
Figure 13.
70
70
S&P 500 DIVIDEND PAYOUT RATIO*
(percent)
65
65
60
60
55
55
50
50
45
45
40
40
35
35
Q3
30
30
25
25
89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
* Four-quarter trailing total dividends divided by four-quarter aggregate operating earnings. Source: Standard & Poor's.
Figure 14.
18
18
S&P 500 DIVIDEND YIELD vs 10-YEAR TREASURY BOND YIELD
16
(percent)
16
14
14
10-Year US Treasury Yield (3.53)
12
S&P 500 Dividend Yield* (1.74)
12
10
10
8
8
6
6
4
4
Jan
2
Q4
2
0
0
54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26
* S&P 500 four-quarter trailing dividends per share divided by quarterly closing value of the S&P 500 index. Source: Standard & Poor's and Board of Governors of the Federal Reserve System.
Page 7 / February 1, 2023 / NIPA vs. S&P 500 Dividends
Yardeni Research, Inc.
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