Dividend Hikes Offer Optimism Amid Tariff Turmoil

by Christine Short of Wall Street Horizon, 5/9/25

Takeaways

  • Stocks have rebounded sharply off their early-April lows, but macro risks persist

  • Dividend stocks have largely outperformed so far this year

  • We profile a pair of blue chips that recently announced dividend hikes, which has turned out to be a broader Q2 theme

S&P 500® earnings per share estimates have come down sharply. According to FactSet, calendar year 2025 is now expected to show $266 in operating EPS for the Index.1 Forecasts had called for nearly $280 as recently as last Q3 last year. Of course, macro headwinds have come about, to put it nicely. Many large US multinational corporations are “tarrified”, as Ed Yardeni puts it. Josh Brown of Ritholtz Wealth Management has dubbed it “Tariff Spring.” Still, global equities have proven to be resilient.

Following a sharp rally off the April 7th low, US large caps now collectively trade just above the 20x price-to-earnings multiple mark, while international stocks actually closed April at an all-time high on a total return basis.2

Strong Dividend Increase Trends

Investors should go beyond profit expectations and near-term price action, though. Our team dug into the data and found some interesting results. It turns out that since the beginning of April, 29% of global firms that have updated their dividend policies have raised their dividend, while just 7% have announced a cut.

While still early for a full second-quarter tally, that 23% positive differential is five percentage points above the 17.9% hikers-to-cutters gap from Q2 last year. It’s also better than the 17.2% figure compared to two years ago.

dividend changes