Will Dividend Inflation Rise In 2022?

Will Dividend Inflation Rise In 2022?
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The US stock market has been in turmoil recently. As a Dividend Growth Investor, I usually ignore stock price fluctuations, unless I’m looking to buy high quality stock at a discount. As a long -term investor, I am committed to raising my dividend income. Dividends are more stable, predictable and reliable than stock prices. Dividends are likely to grow above the inflation rate over time.

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The stability and predictability of dividend payments make them an ideal source of income for retirees. Although share prices may vary, I sleep well at night, knowing my dividends will come in, and likely to rise as well.

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In previous reviews, I have found that US dividends tend to grow more than the inflation rate over time. You may remember this chart from this post:

Dividend increases

Source: How dividends protect income from inflation

With inflation rising, I decided to take a look at US Equities, and see what the trend was. It looks like so far this year, dividend stocks are able to maintain purchasing power. Of course, the year is still young. If we have a recession, there is a high probability that dividend growth will slow down. Alternatively, it can also accelerate as companies pass on cost increases to customers.

I went ahead and got a list of all the companies in the S&P 500, and then I looked at their dividend actions up to 2022. This review covers all S&P 500 member companies, and tracks all dividend actions in between of January 1st and June 9th.

There have been 193 dividend increases, 5 initial dividends and 5 dividend reductions so far in 2022. You can view a summary of dividend actions by sector in the table below:

Dividend increases

Next, I drilled down the list of dividend increases. I would like to see how many dividend increases until this year exceed 8%. While inflation is 8.60%, I used 8% as the number, because the inflation figure is rising in 2022. I don’t want to unfairly punish companies that raised dividends earlier in the year. I would argue if we were arguing about the 0.60% difference, we were nitpicking and splitting hairs.

Anyway, of the 193 dividend increases so far in 2022, it looks like 117 increases are higher than 8%. This is good to know.

Dividend increases

A more interesting view is to look at the list of dividend aristocrats. There are 32 dividend increases so far in 2022.

It looks like 13 companies have raised dividends by more than 8%. The remaining companies raised dividends by less than 8%. However, the average dividend increase was 7.46%.

Dividend increases

There are 31 dividend aristocrats, who haven’t raised dividends so far in 2022. I’ve listed them below, and also included the months in which these companies raised dividends in 2021. If history is any Guide, these companies usually tend to announce their rising dividend at about the same time each year.

Dividend increases

On a side note, this data is straight from S&P Global. They don’t seem to have included Realty Income Corp (NYSE: O) on their dividend increase lists. It slightly raised dividends in March from $ 0.2465 to $ 0.247, but I think it will even raise dividends several times in 2022.

All data is from S&P Global.

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