Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
Blog Home
Bob Carey
Chief Market Strategist
X •  LinkedIn

  The Recovery In Financials Could Include Rising Dividend Payouts
Posted Under: Stock Dividends
Supporting Image for Blog Post


View from the Observation Deck 

  1. As indicated in the chart, from 2004-2007, the financial companies in the S&P 500 Index accounted for nearly 30% of the S&P 500 Index's dividend payout. In that period, no other sector even reached 15%.
  2. The chart shows a steep plunge in the contribution from financial companies in 2009 and 2010. This was an unfortunate byproduct of the 2008-2009 financial crisis.
  3. The fallout from the financial crisis was hard on many financial companies, particularly the banks, in our opinion. In some cases, dividends were suspended altogether.
  4. In past posts, we noted that the contribution from financial companies to the S&P 500 Index's dividend payout had once again ascended to a level that exceeded the other nine sectors.
  5. As noted in the chart, for now, that is no longer the case due to S&P's decision to create an 11th sector: Real Estate. Real Estate contributed 4.69% as of 9/20/16. The biggest contributor was Information Technology at 15.23% (not shown).
  6. The recovery in the financial sector should continue, in our opinion. Those banks that cleared the Fed's annual stress tests in June 2016 were approved to return capital to their shareholders in the form of stock dividends and share buybacks. In September, Goldman Sachs estimated that banks should return capital equal to an average of 83% of their estimated earnings over the next year, up from 69% following last year's stress tests, according to Market Realist. 

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Index is a capitalization-weighted index comprised of 500 stocks used to measure large-cap U.S. stock market performance, while the S&P 500 Financials Index is capitalization-weighted and comprised of S&P 500 Index constituents representing the financial sector.

To Download a PDF of this post, please click here.

Posted on Tuesday, September 27, 2016 @ 1:44 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
Market Commentary and Analysis
Market Commentary Video
Monthly Talking Points
Quarterly Newsletter
Market Observations
Subscribe To Receive Email

What The Slowdown In Global Growth Looks Like
Technology Stocks Have Delivered Strong Returns In The Current Bull Market
18 ... 16 ... Better Earnings Ahead!?
This Covered Call Index Tends To Beat The Broader Market In Low Return And Negative Return Climates
Leveraged Loans (Senior Loans) Could Be One Of The Beneficiaries Of Higher Interest Rates
An Update On The Recovery In Financials
The Bull Market In The S&P 500 Index May Be Picking Up Steam After A Sluggish
Snapshot of U.S. Equity Styles/Market Caps
The U.S. Dollar Index Has Been Range Bound Since March 2015
A Snapshot of Bond Valuations
Skip Navigation Links.
Search by Topic
Skip Navigation Links.

The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.