“The companies that comprise the S&P 500 distributed a record $630 billion in dividends in 2024, up from $565 billion and $588 billion in 2022 and 2023, respectively. Despite record distributions, the dividend payout rate of the S&P 500 Index is currently well below average.
The Index’s earnings are estimated to surge from $243.12 billion in 2024 to $273.23 billion in 2025.
Given that dividends are paid from profits, a company’s ability to increase its earnings plays a crucial role in assessing its capacity to maintain (or grow) its dividend payout. From our perspective, the consistent, long-term pattern of earnings growth, combined with the continued decline in the Index’s yield, indicates that the environment is ripe for continued dividend growth.”
– Bob Carey, First Trust Chief Market Strategist
Last month, we repeated our annual advice to avoid being surprised by the geopolitical, economic, and market events in store for 2025. This month, we conduct our annual review of the equity market over the last 62 years.
Save the Date for April 30
We have been publishing our Great Investors article series for over 10 years now, and this series has consistently been our most popular content every year. We thank our loyal readers, and we truly appreciate your comments and feedback over the years.
As you know, we have changed the format for our Great Investors series from a monthly written commentary to a quarterly webinar format. We will deliver a brief talk summarizing our outlook on current events, delivered in the same style you have come to appreciate in our monthly article series. We will then have ample time for Q&A and discussion to address any additional questions you may have.
Our next webinar will be held on Wednesday, April 30th, and will be available via online live stream and in person for those who can attend. Please save the date; more details will be available soon!
62 Years of Growth
Although age 65 has long been assumed to be the retirement age in America, the law says that Social Security benefits are available starting at age 62. This also happens to be the average year that folks retire in our great nation. So, every year, we consider the performance of the American equity market in the lifetime of a person reaching this milestone age.
If you are turning 62 this year, you were born in 1963, which was the year that Beatlemania broke out in Britain, the iconic film Dr. Strangelove premiered, Dr. Michael DeBakey performed the first human heart transplant, the Boston Celtics won their sixth NBA championship in seven years, and President Kennedy was assassinated.
Investment–wise, here are a few nuggets that may be of interest as you enter retirement this year:
- The S&P 500 closed out 1963 at 75. In 2024, it ended at 5,881.
- The cash dividend paid out during 1963 was $2.35. Last year, it was $73.40.
- The Consumer Price Index ended 1963 at 31. It closed out 2024 at 318.
In round numbers, here is a summary of the growth in these 3 key metrics over this period:
As a newly minted 62-year-old headed off to enjoy 30 or more years of retirement and facing an ever-increasing cost of living, this information may prove helpful as you allocate your portfolio.
Helping Those You Care About
Over the last few years, the patience of all long-term investors has been severely tested. As must happen every few years, we were basically required to do just one big thing: reject the idea that “this time it’s different,” and hew to the belief that “this too shall pass.” We must not doubt that we’ll get many additional opportunities to practice patience and discipline in the years to come.
Successful investing, while always fundamentally simple, will never be easy. You may have a family member, colleague, or friend who perhaps did not fare as well and who you feel might have benefited from the sort of advice you were receiving. Should that be the case, we would certainly appreciate your introducing us to them. We very much enjoy working with you and would welcome the opportunity to offer the same level of planning and service to people whom you care about.
You are more than welcome to bring a friend or family member to our event on April 30th, or to share the recording of our discussion that night.