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LONDON – Global dividend payments could recover by as much as 5% this year, a new report estimated on Monday after the coronavirus caused the biggest drop in payments since the financial crisis more than a decade ago. Corporate payments to shareholders plunged more than 10% on an underlying basis in 2020, when one in five cut their dividends and one in eight canceled them completely.
A total of $ 220 billion in cutbacks were made between April and December, based on investment manager Janus Henderson’s Global Dividend Index. But there are signs that companies are beginning to reintegrate at least some of them.COSTCO’S OFFERS GREAT SPECIAL DIVIDEND
Janus Henderson’s report warned that dividends could still fall by 2% this year, in the worst case. But its best scenario sees the 2021 dividends up to 5% on a headline basis.
“It is very likely that we will see companies paying special dividends in 2021, using strong cash positions to offset part of the decline in distributions in 2020”.
Bank dividends are likely to boost the recovery in payments in 2021, the report said, after the European Central Bank and Bank of England eased general bans on creditors on dividends and repurchases. These were imposed during the first wave of the crisis to prepare for a potential increase in non-performing loans.
Global dividend payments could recover by as much as 5% this year, a new report estimated on Monday after the coronavirus caused the biggest drop in payments since the financial crisis more than a decade ago. (iStock)
British lenders Barclays and NatWest resumed payments this month.
Last year, the dividend ban meant that banks cut or canceled $ 70 billion in payments worldwide, according to the report.
But global dividend cuts have proved less dramatic than expected. In August, Janus Henderson expected the virus to drive companies to cut $ 400 billion in dividends, almost double the end result.
A resilient fourth quarter of 2020 helped, said Janus Henderson. Companies such as German automaker Volkswagen and Russia’s biggest creditor, Sberbank, have restored payments.
Mining and oil companies cut dividends after a drop in commodity prices, while consumer discretionary companies also suffered from the blockages.
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European dividends, not including Britain, fell 28.4% on a basic basis in 2020, to $ 171.6 billion. “This was the lowest total in Europe since at least 2009,” said Janus Henderson. In contrast, payments in North America increased 2.6% for the full year, setting a new record of $ 549 billion, the report said. Canada had the lowest dividend cut in the world, the index showed.