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I’m wondering if there’s data on how much dividends for total market or S&P500 go up or down on average during bull vs bear market. As a retiree, I rely on my dividends and interest for my living expenses. It seems somewhat arbitrary to just hold 5-7 years of total living expenses (minus SS/pension) when in fact, dividends would like still happen even in a market downturn?
We hold 5-7 years of living expenses because past performance is never a guarantee of future, in dividend payouts or in market prices. Our world, including financial markets, is driven by randomness. Expected returns are heavily influenced by rare, “long tail” events. There is no way to predict what future crises will look like. And the lucky few who guess at one will not guess right at the next.
Having said this, dividends tend to move far less — up or down — than prices. But as we saw with ex-US dividends during the pandemic, they can still drop more than long-term average declines for typical business cycle recessions.
Thanks, good to know about ex-US dividends.
That seemed to be a unique outcome. Every other decline I looked at was different from the pandemic’s dividend drop with respect to US v ex-US.
much appreciated
This isn’t quite the answer you were looking for, but I think it’s a useful data point: At one juncture during the 2008-09 Great Recession, the dollar amount of dividends paid out by the S&P 500 was down 25%.