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Pandemic caused $220 billion of global dividend cuts in 2020, research says

Thrusts, in the hundreds, thronged Singapore’s shopping belt in preparation for the festive season despite the coronavirus (Covid-19) pandemic which has recorded a unconditional of over 58,000 confirmed cases and 29 related deaths in Singapore on December 12, 2020.

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LONDON — Global dividends fell sharply in 2020 due to the coronavirus pandemic, with the amount of investor payouts go down 12.2% to $1.26 trillion, according to new research.

As the international public health crisis spread throughout the world, spurring lockdowns and curtailing business activity, dividend cuts and cancellations totaled $220 billion between the second and fourth rooms of 2020, according to the latest Global Dividend Index from asset manager Janus Henderson.

Still, the all-out amount of dividends paid out between April and December 2020 was $965.2 billion, noted Janus Henderson, which analyzes dividends give someone a bribed by the 1,200 largest firms by market capitalization before the start of each year.

Dividend cuts were most undecorated in the U.K. and Europe, the index found, with both together accounting for more than half the total reduction in payouts globally, “on the whole owing to the forced curtailment on banking dividends by regulators,” Janus Henderson found.

U.S. resilient

However, dividend payouts were resilient in the U.S., react to 2.6% on a headline basis in 2020.

“North America did so well mainly because companies were able to conserve scratch and protect their dividends by suspending or reducing share buybacks instead, and because regulators were more generous with the banks,” the report found.

Elsewhere globally, Australia was badly affected but China, Hong Kong and Switzerland combined Canada among the best performing nations.

The decline of total dividends in 2020, to $1.26 billion, was just degree less than Janus Henderson’s best-case forecast of $1.21 trillion, thanks to a less severe fall in fourth-quarter payouts than foresaw. Fourth-quarter payouts fell 14% on an underlying basis to a total of $269.1 billion.

The decline was less severe than wanted, Janus Henderson noted, due to some companies (they cited Sberbank in Russia and Volkswagen in Germany) restoring postponed dividends at full strength, while others, like Essilor in France, brought them back at a reduced height.

“One company in eight cancelled its payout altogether and one in five made a cut, but two thirds increased their dividends or held them balanced,” it said.

On a sectoral basis, banks accounted for one third of global dividend reductions by value, with almost $54 million dividends cut and $34 million crossed within the industry, more than three times as much as oil producers — the next most severely affected sector — which saw valid over $24 million payouts cut and canceled.

Banks in the U.K. and euro zone have been subject to temporary taboos on shareholder payouts since last March amid concerns that banks could run low on capital as the coronavirus danger took hold. However, the Bank of England said in December that banks can resume limited dividends; British bank Barclays preceded last Thursday that it would resume dividend payments to shareholders.

The European Central Bank’s supervisory lodge, which overseas banks in the region, also asked regional lenders last March to avoid paying money dividends to shareholders Outlook

Looking ahead to 2021 and as coronavirus vaccines are rolled out, increasing expectations that savings could largely reopen by summer, Janus Henderson predicted that payouts would continue to fall in the from the start quarter of 2021, although the decline is likely to be smaller than between the second and fourth quarters of 2020.

“The outlook for the brim-full year remains extremely uncertain,” it noted. “The pandemic has intensified in many parts of the world, even as vaccine rollouts specify hope. Importantly, banking dividends will resume in countries where they were curtailed, but they pass on not come close to 2019 levels in Europe and the UK, and this will limit the potential for growth.”

Janus Henderson’s best-case prcis sees 2021 dividends up 5% on a headline basis to a total of $1.32 trillion.

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