Since early March 2020 we have seen mass cancellations of already-declared dividends. ORATS provides global dividend forecast data for over 25,000 equities, ADRs and ETFs, including US, UK, Europe and Asia, and it is bad everywhere.
In the UK, in just one 4-day span we recorded over 50 cancellations or suspensions. These included top banks Barclays, HSBC, Lloyds Banking Group , Royal Bank of Scotland , Standard Chartered and the British part of Santander. Their regulator the Prudential Regulatory Authority requested the halts last week to preserve capital.
Hong Kong, China and Korea forecast lists have shown similar cuts or suspensions.
In the US we are tracking many cancellations and the options market are predicting more cuts. Even JP Morgan is considering cutting its dividend as Jamie Diamond explained in a recent interview. If the leader of the world’s most valuable bank is talking about a dividend suspension, it would seem that many other banks and all public companies will be vulnerable if the economy doesn’t eventually recover this year.
The problem is earnings. Dividends follow earnings. The coronavirus pandemic is upending the economy and company's bottom-lines.
Bryce Doty, senior portfolio manager at Sit Investment Associates Inc. said in a ZeroHedge article: “The earnings coming up are probably going to be the most unpredictable or worst estimates we’ve ever seen in the history of this country. It’s a completely different world. Anyone who lived through the financial crisis can’t think the way they did then. It’s a whole new ballgame now.”