NIPA vs. S&P 500 Dividends - Yardeni Research
Corporate Finance Briefing: NIPA vs. S&P 500 Dividends
Yardeni Research, Inc.
June 4, 2021
Dr. Edward Yardeni
516-972-7683 eyardeni@
Joe Abbott
732-497-5306 jabbott@
Mali Quintana
480-664-1333 aquintana@
Please visit our sites at blog.
thinking outside the box
Dividends
Figure 1.
1400
DIVIDENDS IN CORPORATE PROFITS (billion dollars, 4-quarter sum)
1200
Dividends
1000
All Corporations (1355.4)
Nonfinancial Corporations (692.9)
S&P 500 (482.0)
800
600
400
1400 Q1
1200
1000
800 Q4
600 Q1
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
Source: Federal Reserve Board, Financial Accounts of the United States, Standard & Poor's and Bureau of Economic Analysis.
Figure 2.
75
S&P 500 DIVIDEND YIELD 70 (trailing 4-quarter sum)
65
75
70 Q1
65
60
60
Invested in 1970 (66.8)
55
Invested in 1980 (42.5)
55
50
Invested in 1990 (17.4)
50
Invested in 2000 (4.4)
45
Invested in 2010 (4.6)
45
40
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
Source: Standard & Poor's Corporation.
Page 1 / June 4, 2021 / 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
Q1
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
* 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.
100.2
80.2 S&P 500 DIVIDENDS & RETAINED EARNINGS PER SHARE 60.2 (dollars, trailing 4-quarter sum, ratio scale)
40.2
20.2
Dividends Retained Earnings*
100.2 80.2 Q1 60.2 40.2
20.2
.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
* Reported earnings minus dividends per share. Source: Standard & Poor's.
Page 2 / June 4, 2021 / NIPA vs. S&P 500 Dividends
Yardeni Research, Inc.
Dividends
Figure 5.
100
S&P DIVIDEND PAYOUT RATIOS*
(percent) 80
S&P 500
S&P Industrials 60
40
100 80 60 Q1 40
20
20
0
0
100
100
S&P 500 COMPANIES PAYING A DIVIDEND
95 (percent of total)
95
90
90
85
85
80
80
75
2020 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
* 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
Q1
50
50
Q1
0
0
NIPA Dividends (as a percent of NIPA After-Tax Profits*) (69.0)
S&P 500 Dividends (as a percent of S&P 500 reported net income) (31.9)
-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
* 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 / June 4, 2021 / 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* (1.45)
12
S&P 500 Forward Earnings Yield** (4.52)
12
10
10
8
8
6
6
Dec
4
4
2
2
Q1
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
* 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 (0.02)
12
S&P 500 Forward Earnings Yield* (4.72)
12
10
10
8
8
6
6
May
4
4
2
2
0
May 0
79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23
* 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 / June 4, 2021 / NIPA vs. S&P 500 Dividends
Yardeni Research, Inc.
Dividends
Figure 9.
7010
6010 BLUE ANGELS: S&P 500 INDEX AND DIVIDEND YIELD
5010 4010
(ratio scale)
3010
S&P 500 Index
2010
06/02/21
Blue Angels S&P 500 Using
Implied Dividend Yield*
1010
7010
1%
6010
5010
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
* 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.
7030
6030 5030
S&P 500 INDEX AND DIVIDEND YIELD
4030
(ratio scale)
3030
S&P 500 Index
2030
06/02/21
S&P 500 Blue Angels
Implied Price Index* 1030
7030
1%
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
* 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 / June 4, 2021 / NIPA vs. S&P 500 Dividends
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