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

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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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