Dividends paid by U.S. companies rose $7.4 billion in the second quarter. While payout growth is positive, the pace of those increases is slowing. Data courtesy of S&P Dow Jones Indices indicates the second-quarter dividend growth rate was less than what was seen in the first three months of the year. t was also less than half the increase in year-earlier period.
Lethargic payout growth in the second quarter was largely the result of U.S. companies keeping dry powder on hand amid turbulent trade policy from the Trump administration. That scenario, which hasn’t entirely ended, underscores the importance of quality and reliability. Those traits are accessible with the ALPS O’Shares U.S. Quality Dividend ETF (OUSA ).
In the face of trade headwinds, OUSA has performed admirably this year, returning nearly 3%. That’s not a home run. But it could help keep dividend investors engaged over long holding periods and when macroeconomic challenges arrive. Additionally, OUSA could be poised for better things in the back half of the year.
Tailwinds Could Emerge for OUSA
Potential catalysts loom for OUSA, including the possibility that companies that were restrained with dividend increases in the first half of the year or didn’t boost payouts at all will be a bit more liberal in the coming months.
“Working with a base case for a higher-level resolution, the second half of 2025 could be stronger than historical averages for dividends,” noted Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. “Q3 is expected to start out with an improvement from big banks as they continue to increase their dividends, helped by the Fed’s recent positive stress test results; the third quarter has the potential to set a new quarterly dividend payment record. For 2025, the S&P 500 is expected to post a record payment, posting a 6% increase in dividend payments, which is down from the pre-2025 8% expectation; for 2024 dividend payments increased 6.4% and in 2023 5.1%.”
The success of banks in the Fed’s recent stress tests is meaningful to investors mulling OUSA. That’s because the ETF allocates 16.16% of its weight to the financial services sector, its second-largest sector exposure.
Speaking of OUSA’s sector weights, it devotes 24% of its roster to technology stocks. While that sector remains low-yielding, it’s been a major driver of S&P 500 dividend growth in recent years. Plus, many firms in that space have the cash on hand to continue boosting payouts over the long term.
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