07-26-2016, 09:38 AM
I think the title is a bit sensational but I can't argue with anything he says. It seems many of the companies I follow in my sector spreadsheets are seeing slowing dividend growth, with the industrials, large cap consumer staples, segments of consumer discretionary, and energy companies being the ones that come immediately to mind. I would say this is more an effect of where we are in the business cycle rather than calling it the end of an era.
We saw earnings grow quickly coming out of the recession but that has now leveled off and growth has slowed. A crash in crude oil prices has caused industrial spending to slow which weakens dividend growth for energy companies and the industrials. A strong dollar has also taken a big bite out of earnings from international companies which has led to slowing growth for KO, PG, KMB, PM and the like.
It seems that the utilities have seen a bit stronger dividend growth in recent years, and the healthcare sector also seems to be doing okay, along with portions of tech.
So overall, I agree with the overall premise that dividend growth is slowing, but I don't think the sky is falling by any means.
We saw earnings grow quickly coming out of the recession but that has now leveled off and growth has slowed. A crash in crude oil prices has caused industrial spending to slow which weakens dividend growth for energy companies and the industrials. A strong dollar has also taken a big bite out of earnings from international companies which has led to slowing growth for KO, PG, KMB, PM and the like.
It seems that the utilities have seen a bit stronger dividend growth in recent years, and the healthcare sector also seems to be doing okay, along with portions of tech.
So overall, I agree with the overall premise that dividend growth is slowing, but I don't think the sky is falling by any means.