Stock Market Briefing: NIPA vs. S&P 5 January 8, 218 Dr. Edward Yardeni 516-972-7683 eyardeni@ Joe Abbott 732-497-536 jabbott@ Mali Quintana 48-664-1333 aquintana@ Please visit our sites at www. blog. thinking outside the box
12 Figure 1. DIVIDENDS IN CORPORATE PROFITS (billion dollars, 4-quarter sum) 12 1 1 8 All Corporations (99.) Nonfinancial Corporations (71.8) S&P 5 (418.9) 8 6 6 4 Q4 4 2 2 8 81 82 83 84 85 86 87 88 89 9 91 92 93 94 95 96 97 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 16 17 18 19 2 Source: Federal Reserve Board, Financial Accounts of the United States, Standard & Poor s and Bureau of Economic Analysis. 6 55 Figure 2. S&P 5 DIVIDEND YIELD (trailing 4-quarter sum) Q4 6 55 5 45 4 Invested in 197 (56.7) Invested in 198 (36.4) Invested in 199 (14.8) Invested in 2 (3.6) 5 45 4 35 35 3 3 25 25 2 2 15 15 1 1 5 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 22 Source: Standard & Poor s. 5 Page 1 / January 8, 218 / Stock Market Briefing: NIPA vs. S&P 5 www.
2 Figure 3. TREASURY BILL YIELD VS S&P 5 DIVIDEND YIELD (percent) 2 15 Three-Month Treasury Bill Yield S&P 5 Dividend Yield* 15 1 1 5 5 Q4 46 48 5 52 54 56 58 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 22 * S&P 5 four-quarter trailing dividends per share divided by quarterly closing value of the S&P 5 index. Source: Standard & Poor s and Federal Reserve Board. 8.2 6.2 4.2 Figure 4. S&P 5 DIVIDENDS & RETAINED EARNINGS PER SHARE (dollars, trailing 4-quarter sum, ratio scale) Q4 8.2 6.2 4.2 2.2 2.2 Retained Earnings*.2 46 48 5 52 54 56 58 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 22.2 * Reported earnings minus dividends per share. Source: Standard & Poor s Corporation. Page 2 / January 8, 218 / Stock Market Briefing: NIPA vs. S&P 5 www.
1 8 6 Figure 5. S&P DIVIDEND PAYOUT RATIOS* (percent) S&P 5 S&P Industrials 1 8 6 4 4 2 1 95 9 S&P 5 COMPANIES PAYING A DIVIDEND (percent of total) 2 1 95 9 85 8 75 216 85 8 75 7 65 46 48 5 52 54 56 58 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 22 65 7 * Four-quarter trailing dividends per share divided by four-quarter trailing reported earnings. Source: Standard & Poor s Corporation and FactSet. 15 Figure 6. DIVIDEND PAYOUT RATIOS (percent) 15 1 1 5 5-5 NIPA (as a percent of NIPA After-Tax Profits*) (57.5) S&P 5 (as a percent of S&P 5 reported net income) (43.3) 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2-5 * From Current Production. Including IVA & CCadj. These two adjustments restate the historical cost basis used in profits tax accounting for inventory withdrawals and depreciation to the current cost measures used in GDP. Source: Federal Reserve Board, Flow of Funds Accounts, Standard & Poor s and Bureau of Economic Analysis. Page 3 / January 8, 218 / Stock Market Briefing: NIPA vs. S&P 5 www.
18 16 Figure 7. S&P 5 DIVIDEND YIELD vs. US TREASURY 1-YEAR BOND YIELD (percent) 18 16 14 12 1 Bond Yield (2.4) S&P 5 Dividend Yield* (1.83) 14 12 1 8 8 6 6 4 4 2 Dec 2 52 54 56 58 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 * S&P 5 four-quarter trailing dividends per share divided by quarterly closing value of the S&P 5 index. Source: Standard & Poor s and Federal Reserve Board. 61 51 41 31 21 11 Figure 8. S&P 5 INDEX AND DIVIDEND YIELD (ratio scale) S&P 5 Index 1/3/18 Blue Angels Implied Dividend Yield* 1% 2% 3% 4% 5% 6% 61 51 41 31 21 11 1 45 5 55 6 65 7 75 8 85 9 95 5 1 15 2 25 1 * Blue lines show hypothetical values of S&P 5 stock price index using actual S&P 5 dividend (4-quarter trailing sum) divided by dividend yields from 1.% to 6.% Source: Standard & Poor s. Page 4 / January 8, 218 / Stock Market Briefing: NIPA vs. S&P 5 www.
63 53 43 33 23 13 Figure 9. S&P 5 INDEX AND DIVIDEND YIELD (ratio scale) S&P 5 Index 1/3/18 S&P 5 Blue Angels Implied Price Index* 1% 2% 3% 4% 5% 6% 63 53 43 33 23 13 3 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 22 24 3 * Blue lines show hypothetical values of S&P 5 stock price index using actual S&P 5 dividend (4-quarter trailing sum) divided by dividend yields from 1% to 6% Source: Standard & Poor s. 12 Figure 1. CORPORATE DIVIDENDS: TOTAL vs S CORPORATIONS (billion dollars) 12 1 216 1 8 Corporate * S Corporations 8 6 6 4 214 4 2 2 1991 1993 1995 1997 1999 21 23 25 27 29 211 213 215 217 219 221 * Annual sum of quarterly data. Source: Bureau of Economic Analysis and IRS Statistics of Income. Page 5 / January 8, 218 / Stock Market Briefing: NIPA vs. S&P 5 www.
6 Figure 11. S CORPORATION DIVIDENDS (as a percent of Corporate *) 6 5 5 4 214 4 3 3 2 1991 1993 1995 1997 1999 21 23 25 27 29 211 213 215 217 219 221 2 * Annual sum of quarterly data. Source: Bureau of Economic Analysis and IRS Statistics of Income. Page 6 / January 8, 218 / Stock Market Briefing: NIPA vs. S&P 5 www.
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