Survey reveals investors will lose $263 billion in payouts as a result of the pandemic
The economic cost of the coronavirus pandemic continues to be calculated and a report released today (Nov. 23) highlights how investors are set to lose out.
Dividend payments by the world’s biggest companies are expected to be cut by up to 20% according to investment firm Janus Henderson.
Although this is a smaller reduction than many had feared earlier in the year, it still represents a hefty US$263 billion less in annual dividend payments to shareholders compared to 2019.
If the outlook proves accurate, it would be the biggest cut in dividend payments since the financial crisis a decade ago and will be a blow to pension funds as well as individual investors.
A $55 billion drop in payments in the third quarter follows a $108 billion plummet in the second quarter.
“Our best case now sees a fall of -17.5% to $1.20 trillion on an underlying basis. Our worst case sees underlying dividends declining -20.2% to $1.16 trillion,” Janus Henderson reported.
Firms based in the United Kingdom (-$28bn) and France (-$25bn) will post the largest declines in dividend payments with the US expected to be down $4.4 billion. Canada is not included in the listing.
The largest drops
Those firms that rely on consumers’ discretionary spending have cut their dividends the most, down 43% in the third quarter on an underlying basis. This is driven by auto and leisure firms. Banks are also paying out less.
While pharmaceutical and grocery firms have seen profits rise and are paying larger dividends, it is big tech that is winning and Microsoft is set to become the world’s largest dividend payer with an increase close to 10% in quarter four.
The good news for investors is that there could be a strong rebound in 2021.
Global dividends forecast to inch back from coronavirus cliff edge https://t.co/g4qtv3Eyd0 pic.twitter.com/HMqX5KFEal
— Reuters (@Reuters) November 23, 2020
