Winter 2023 Snapshot of the Future for S&P 500 Dividends

We last presented a picture of the future for the dividends of the S&P 500 (Index: SPX) in mid-December 2023. At the time, we commented on how much the brighter the outlook for quarterly dividends had become since we presented our regular mid-quarter snapshot of the future for dividends from just a month earlier.

Now that its time for our regularly scheduled quarterly snapshot, let’s see how things have changed. We find the outlook for the S&P 500′s dividends per share has continued to brighten during the past two months. Unlike politics, since expectations for dividends are a fundamental driver of stock prices, this change has provided the underlying momentum needed to boost the index to the new all-time highs it is now hitting.

In the following animated chart, we show how much those expectations have changed for each future quarter of 2024. The chart presents both historic (darker blue) and projected (lighter blue) dividend futures data for the S&P 500 from CME Group for the period from 2021-Q4 through 2024-Q4. In the chart, while the data for 2023-Q4 changes from a projected value (lighter blue) to a historic value (darker blue), the real action happens in the projections for each quarter of 2024.

Looking at the current quarter of 2024-Q1, the projected cash dividend to be paid to S&P 500 investors by the end of the quarter has risen by 40 cents a share, or by 2.2%, from the $17.88 per share expected on 15 December 2023 to the $18.28 expected as of 9 February 2024. Meanwhile, the other future quarters of 2024 show similar gains.

More remarkably, half that change has taken place since 1 February 2024. That date marks when the megacap company Meta Platforms (NASDAQ: META), the S&P 500 component formerly known as Facebook, made the surprise announcement it would initiate a dividend payment to its shareholders. The dividend futures data for the S&P 500 responded by jumping 20 cents a share after the announcement to reach the $18.28 per share figure that is currently projected for the quarter.

There is some speculation that two of the stock market’s other megacap firms, Alphabet (NASDAQ: GOOG and GOOGL) and Amazon (NASDAQ: AMZN) may also initiate a dividend. However it is much too early to say if a phenomenon like the speculation bubble that preceded the 2013 announcement that Apple (NASDAQ: AAPL) would re-initiate its dividend will repeat in 2024, driven by what investors hope will happen with these two firms. But it is certainly fun to think about!

More About Dividend Futures Data

Dividend futures indicate the amount of dividends per share to be paid out over the period covered by each quarter’s dividend futures contracts, which start on the day after the preceding quarter’s dividend futures contracts expire and end on the third Friday of the month ending the indicated quarter. So for example, as determined by dividend futures contracts, the now “current” quarter of 2024-Q1 began on Saturday, 16 December 2023 and will end on Friday, 15 March 2024.

That makes these figures different from the quarterly dividends per share figures reported by Standard and Poor. S&P reports the amount of dividends per share paid out during regular calendar quarters after the end of each quarter. This term mismatch accounts for the differences in dividends reported by both sources, with the biggest differences between the two typically seen in the first and fourth quarters of each year.

Image credit: Stable Diffusion DreamStudio Beta. Prompt: “A fortune teller who predicts the future of stock market dividends.”