NIPA vs. S&P 500 Dividends

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

Yardeni Research, Inc.

July 9, 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 (1682.4)

Nonfinancial Corporations (837.7)

S&P 500 (575.0) 1200

2000

1800 Q1

1600

1400

1200

1000 800

1000

Q1

800

600

Q2

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.

85

S&P 500 DIVIDEND YIELD 80 (trailing 4-quarter sum)

75

85

Q2

80

75

70

70

65

Invested in 1970 (79.7)

65

Invested in 1980 (50.7)

60

Invested in 1990 (20.8)

60

55

Invested in 2000 (5.2)

55

50

Invested in 2010 (5.5)

50

45

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 / July 9, 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

Jun

5

Q2

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 Q2 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 / July 9, 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

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

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

50

Dividend Payout Ratios

NIPA as Percent of NIPA

0

After-Tax Profits* (70.9) S&P 500 as a Percent of S&P 500

Reported Net Income(36.2)

100 Q1

50 Q1

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 / July 9, 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* (1.54)

12

S&P 500 Forward Earnings Yield** (4.52)

12

10

10

8

8

6

6

Dec

4

4

2

2

Q2



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 (5.20)

12

S&P 500 Forward Earnings Yield* (5.32)

12

10

10

8

8

6

6

JJuunn

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 / July 9, 2023 / NIPA vs. S&P 500 Dividends

Yardeni Research, Inc.



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