NIPA vs. S&P 500 Dividends

Corporate Finance Briefing: NIPA vs. S&P 500 Dividends

Yardeni Research, Inc.

March 10, 2022

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.

1600

DIVIDENDS IN CORPORATE PROFITS (billion dollars, 4-quarter sum)

1400

1200

Dividends

All Corporations (1415.8)

Nonfinancial Corporations (813.7)

1000

S&P 500 (511.4)

800

1600

Q4

1400

1200

1000

Q4

800

600

600

Q4

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

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

Q4

70

65

60

60

Invested in 1970 (70.0)

55

Invested in 1980 (44.5)

55

50

Invested in 1990 (18.3)

50

Invested in 2000 (4.6)

45

Invested in 2010 (4.8)

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 26

Source: Standard & Poor's Corporation.

Page 1 / March 10, 2022 / NIPA vs. S&P 500 Dividends

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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

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

* 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 75.2 Q4 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 / March 10, 2022 / NIPA vs. S&P 500 Dividends

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Dividends

Figure 5.

100

100

S&P DIVIDEND PAYOUT RATIOS*

(percent)

80

S&P 500

80

S&P Industrials

60

60

40

40

Q4

20

20

0

0

100

100

S&P 500 COMPANIES PAYING A DIVIDEND

95 (percent of total)

95

90

90

85

85

80

80

2021

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

* 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

Q3

50

50

Q4

0

0

NIPA Dividends (as a percent of NIPA After-Tax Profits*) (57.0)

S&P 500 Dividends (as a percent of S&P 500 reported net income) (29.0)



-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

* 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 / March 10, 2022 / NIPA vs. S&P 500 Dividends

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Dividends

Figure 7.

18

18

S&P 500 FORWARD EARNINGS YIELD vs DIVIDEND YIELD

(percent)

16

16

14

14

S&P 500 Dividend Yield* (1.27)

12

S&P 500 Forward Earnings Yield** (5.12)

12

10

10

8

8

6

6

Feb

4

4

2

2

Q4



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 (0.34)

12

S&P 500 Forward Earnings Yield* (5.12)

12

10

10

8

8

6

6

Feb

4

4

2

2

0

Feb

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 / March 10, 2022 / NIPA vs. S&P 500 Dividends

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Dividends

Figure 9.

7010 6010

5010 BLUE ANGELS: S&P 500 INDEX AND DIVIDEND YIELD

4010

(ratio scale)

3010

2010

S&P 500 Index

03/09/22

1010

Blue Angels S&P 500 Using

Implied Dividend Yield*

7010 1% 6010

5010 3/9 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

03/09/22

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 / March 10, 2022 / NIPA vs. S&P 500 Dividends

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Dividends

Figure 11.

1600

CORPORATE DIVIDENDS: TOTAL vs S CORPORATIONS (billion dollars)

1400

2021

1600 1400

1200

Corporate Dividends*

1200

S Corporations Dividends

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 / March 10, 2022 / NIPA vs. S&P 500 Dividends

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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

30

Q4

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 (1.93)

12

S&P 500 Dividend Yield* (1.27)

12

10

10

8

8

6

6

4

4

2

Feb

2

Q4



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 / March 10, 2022 / NIPA vs. S&P 500 Dividends

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