Source: Unigestion, Bloomberg, as of 23 July 2021.
Firms have spent the last few years engaging in less capex. However, they have been more active in returning capital to shareholders. Our chart shows the growth in dividends per share (cumulated over 12 months) for the S&P 500, Russell 2000, and Nasdaq 100 (which is charted on the right axis to aid clarity).
Both the S&P 500 and Russell 2000 saw dividends grow from about 5% year-over-year in 2016 to 10% in 2019. The Nasdaq 100 saw its dividend growth rate go from 5% in 2015 to 16% in 2019. Following the pandemic, dividends have struggled to grow, in line with earnings, but have recently started to show stability or even recovery. Are we back on the growth path?
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