Global dividend declines the least since financial crisis

LONDON (Reuters) – Coronavirus crisis will see the world’s largest companies pay dividends between 17% -23% this year, which could be as high as $ 400 billion this year, a new report has shown, as sectors such as tech are fighting the trend.

PHILO PHOTO: Passers-by wearing protective face masks following an outbreak of coronavirus (COVID-19) disease are reflected on a screen showing stock prices outside a broker in Tokyo, Japan, March 17, 2020. REUTERS / Issei Kato

Global dividend payments dipped in the second quarter from $ 108 billion to $ 382 billion, said fund manager Janus Henderson, equal to a 22% drop on an annual basis, which will be the lowest since at least 2009.

All regions saw lower payouts except North America, where Canadian payments were found to resist. Globally, 27% of companies cut their dividends, while Europe saw the worst hit more than half and two thirds of them canceled them immediately.

“2020 will see the worst outcome for global dividends since the global financial crisis,” Janus Henderson said in a report released Monday.

“We now expect headline global dividend to fall by 17% in a best-case scenario, paying $ 1.18 trillion … Our worst-case scenario could see payouts drop 23% to $ 1.10 trillion. ” (Graph: Total global dividend since 2009 – here)

An interruption of the various sectors also showed some major differences.

Banks and other financial corporations instructed by the European Central Bank to stop paying dividends accounted for half of the 45% reduction in Europe’s Q2 dividend to $ 77 billion.

Miners and oil companies were hit hard by the broad decline in commodity prices and companies for discretionary consumers saw that their operations were hit hard by government inclusions, resulting in much lower payments.

In contrast, dividends from tech and telecom and healthcare companies were relatively unaffected, with dividends of 1.8% and 0.1%, respectively, on an underlying basis. (Graph: Banks, retailers and media dividends sleep, but tech turns up – here)

That great tech resilience has also helped Microsoft (MSFT.O) and Apple (AAPL.O) visit the top ten dividend payers in the world for the first time this year. That list is still quoted by Nestle (NESN.S).

“Dividend trends reflect the trends in society and the stock market at the moment,” said Janus Henderson’s head of global income generation, Ben Lofthouse.

“We will probably see increases in parts of the tech sector,” he added. “There are a lot of very strong balances in that area.”

Going forward, he said, some key factors will determine how strong the recovery in dividends will be.

The most obvious is the path of the coronavirus, but there is also something American companies are doing later this year and whether the banks of Europe will get the green light to start their payments again early next year.

“The big question for the US is what will happen in the fourth quarter. If many companies make significant cuts to their dividends, payouts will be set at a lower level by the end of 2021. ”

(Graph: World’s Largest Dividend Payers – here)

Report by Marc Jones; Edited by Daniel Wallis

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