S&P Dow Jones Indices Reports $42.5 Billion Decrease in U.S. Indicated Dividend Payments for Q2 2020

  • The Good: Total S&P 500® Q2 2020 dividend payments ticked up 0.3% to 119.0 billion from Q2 2019’s $118.7 as companies fulfilled pre-COVID declarations, but declined 6.2% from the record Q1 2020 payment of $127.0 billion.
  • The Bad: Fifty S&P 500 issues decreased or suspended their forward rate by $29.0 billion in Q2 2020, pointing to a lower Q3 2020 payment.
  • The Hope: The major damage was done in March, April and May, as June appeared to have leveled off; 2020 expected to be down, but limited, if overall reopening succeeds.
  • NEW YORK, July 8, 2020: S&P Dow Jones Indices announced today that indicated dividend net changes (increases less decreases) for U.S. domestic common stocks declined $42.5 billion during Q2 2020 compared to a gain of $8.4 billion in Q2 2019. The decline was the worst since the $43.8 billion decline of Q1 2009 and comes after a $5.5 billion decline in Q1 2020.

    For Q2 2020, aggregate increases amounted to $6.7 billion, down 45.7%, from Q2 2019’s $12.3 billion. Aggregate dividend cuts increased 1,156% to $49.2 billion from $3.9 billion in Q2 2019.

    For the 12 months ending in June 2020, net dividends fell $22.7 billion, compared to a gain of $46.8 billion for the 2019 period, as increases were $46.9 billion versus $60.7 billion, and decreases were $69.6 billion compared to $14.0 billion for the prior period.

    “There were massive dividend suspensions in Q2 2020 as companies had no time to ride out the virus, as sales were cut off and positive cash-flow turned to burn-rate analysis,” said Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices. “The actual payments for Q2 2020 were not as bad as the announcements since Q1 increases stood and most companies continued with their higher rate. However, Q3 will feel the full impact in payments, with most of the cuts being suspensions as opposed to decreases.”

    Silverblatt continued, “The cuts, however, appear to have subsided, as those most impacted have taken their actions and those currently able to ride through the initial downturn are continuing to pay. If the overall reopening improves and regions act to limit any upturns, we would expect to see fewer and smaller dividend increases in the second half, and a significant decrease in cuts and suspension, which could limit the overall 2020 damage to a low single-digit decline. It’s not the high-single-digit dividend gain expected for 2020 at year-end 2019, but for a diversified portfolio the damage could be limited. If, however, the virus flairs up and is unchecked, we could see a return to significant cuts.”

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