Companies are cutting dividends to cope with the economic fallout from the coronavirus. The S&P 500 Index
The dividend cuts and suspensions announced in the past month were a sign of a prolonged drought. Goldman Sachs
The S&P 500 companies that have suspended their dividends this month include cruise line operator Carnival
The $2 trillion Cares Act says that companies that borrow money from the government can't buy back their shares, pay a dividend, or make any capital distributions until 12 months after the loan is paid in full.
"In times like these, financial strength and dividends are two of the critical components in making your investment selections," said Alan Lancz, president of investment advisory firm Alan B. Lancz & Associates Inc. "It's not just the dividend yield, but the sustainability of that dividend."
A significant number of Wall Street investors view dividends are a crucial part of stock ownership. However, 30% to 50% declines even with the modest yields of 4% to 6% still have a lower cash flow output.
"Risks seem contained for the S&P 500, and show up in the obvious, most stressed industries: Energy and Consumer," said Savita Subramanian, head of U.S. equity quantitative strategy at Bank of America. "For more conservative investors, we suggest a focus on our secure dividend screens. For more aggressive investors, it is worth considering that the market is discounting more cuts than we think is likely."
- https://www.nasdaq.com/articles/more-sp-500-companies-suspend-or-cut-dividends-2020-04-27
- https://www.reuters.com/article/us-usa-stocks-weekahead/wall-street-week-ahead-spotlight-falls-on-dividend-aristocrats-after-market-tumult-idUSKCN226337
- https://www.forbes.com/sites/baldwin/2020/04/16/how-much-will-your-dividends-get-cut/#44c2b60119cf
- https://www.cnbc.com/2020/04/15/for-investors-banking-on-dividends-the-pain-has-just-begun.html