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Goldman Sachs analysts slashed his 2024 outlook for the S&P 500 dividend per share (DPS) to $73 (from the prior $75), representing 4% growth year-over-year.
For 2023, the S&P 500 DPS is reaffirmed at $70, which would see dividends rising 5% YoY.
“The earnings outlook for 2023 has softened since we last published our dividend forecasts, and we now expect EPS to grow by just 1% this year compared with our previous EPS growth forecast of 3%. Due to the lagged relationship between earnings and DPS, this will primarily impact 2024 dividends,” the analysts said in a client note.
They see several downside risks for dividends, including stress in the lending environment and a weakening outlook for corporate spending.
For Q1, paid dividends grew 8% YoY, which points to “a healthy environment.”
The analysts are more positive long-term as they believe the S&P 500 dividend futures are pricing an “unreasonably bleak outlook.”
“Relative to market pricing, our base case (non-recessionary) forecasts imply 10% upside to the 2024 contract, 22% upside to the 2025 contract, and 32% upside to 2026,” they concluded.
