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A pedestrian sporting a protecting masks walks close to the briefly closed Marriott Marquis resort in Washington, D.C., U.S., on Thursday, April 23, 2020.
Andrew Harrer/Bloomberg
Second-quarter international dividends plunged by $108 billion, or 22{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}, as corporations scrambled to save lots of money throughout the pandemic.
It was the most important drop because the Janus Henderson World Dividend Index started in 2009.
Dividends within the quarter totaled $382 billion.
The worst declines occurred in Europe (down 45{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}) and the UK (minus 54{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}). Asia Pacific was down 17{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}. Dividends in Japan and rising markets fell by solely 4{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} and 6{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}, respectively.
The U.S. and Canada noticed significantly better outcomes relative to these areas. U.S. payouts fell solely 0.1{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} within the quarter yr over yr. In Canada, dividends grew by 4.1{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}. North America, the one area that noticed a rise, accounted for almost 40{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} of dividends paid within the quarter.
Many U.S. corporations suspended or minimize their dividends beginning in March, together with
Marriott Worldwide
(ticker: MAR),
Delta Air Traces
(DAL),
Boeing
(BA) and
Ford Motor
(F). However that was offset by loads of corporations sustaining and even elevating their payouts, together with
Johnson & Johnson
(JNJ),
Procter & Gamble
(PG),
Costco Wholesale
(COST).
Of the 335 U.S. corporations that Janus Henderson tracks for its index, 296, or almost 90{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}, maintained or elevated their payouts within the quarter.
“The large query for the US is what’s going to occur within the fourth quarter,” based on the report. “If many corporations make important cuts to their dividends, payouts shall be fastened at a decrease stage till in the direction of the tip of 2021.”
For now not less than, dividend cuts amongst giant U.S. corporations seem to have stabilized.
Janus Henderson tracks dividends quarterly, based mostly on the 1,200 largest international corporations by market capitalization as of Dec. 31.
The agency identified that “healthcare and communications dividends proved proof against cuts, however financials and shopper discretionary payouts fell sharply.”
It did range by area.
In Europe and the UK, for instance, many corporations, significantly in sectors comparable to banking, had been compelled by authorities regulators to droop their dividends. Most of the largest U.S. banks, together with regional gamers comparable to
U.S. Bancorp
(USB) and
Residents Monetary Group
(CFG), have maintained their dividends throughout the pandemic.
Janus Henderson expects international dividends this yr to drop 17{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} in U.S. {dollars} “underneath a best-case state of affairs.” In native currencies, that may equate to a 19{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} decline.
Their worst-case decline can be a 23{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} decline in {dollars}.
Within the second quarter, particular dividends had been so much decrease besides in rising markets, the place they held regular. “Specials are one-off funds and are extremely discretionary in nature, so it’s inevitable that numerous corporations will pare them again in a disaster as they give the impression of being to preserve money and strengthen steadiness sheets,” based on Janus Henderson Buyers.
Write to Lawrence C. Strauss at [email protected]