What Happens to Companies Eliminating Dividends?

Mish

Here's a look at nine companies that eliminated dividends this year.

Nine companies eliminating dividends in 2020 declined an average of 52% this year.

It's important to note that these companies may have run out of cash if they didn't.

Looks like it is 11 Cancellations

Bank Dividends?

The European Central Bank has instructed lenders to cancel all measures to return funds to shareholders. Regulators in the US and the UK should follow their example.

UK's Biggest Banks Scrap Dividends and Bonuses

Glencore Defers Dividend Payment

EasyJet Pays Dividend, Takes Bailout

Hong Kong Still Pays Dividends

All Shook Up

Goldman Sachs Sees Dividend Slash of 25%

A Different Kind of Dividend

Important to note that what's happened *so far* is largely baked in based on (bad) choices the U.S. made a week to a month ago, or longer. The data lags our actions to an extent that folks don't seem to fully appreciate. But making better choices *now* *will* pay dividends later.

Mike "Mish" Shedlock

Comments (27)
No. 1-11
Zardoz
Zardoz

In the end, why bother paying dividends when the fed owns all stock?

Dubronik
Dubronik

Wait what? I wan my dividend... It allows me to be an arrogant spendthrift.

Greggg
Greggg

Stock values will certainly go down. Mix that up with how much they went up and subtract the Trump Bump... What a price discovery mess. Meanwhile, We like many others are way long on utility stocks because they always have paid dividends. That stream will be pinched off as utility bills go unpaid. This will have a lasting effect as people don't end up going back to work as expected. About the time people realize they don't have as good a job as they thought they did, we will be moving into the second covid 19 wave.

Sechel
Sechel

or stock buy-backs which have allowed many companies to paint the picture of rising earnings per share despite an aggregate earnings or cashflow picture which was basically flat. this is the ibm problem which jim chanos grew wise to

Sechel
Sechel

banks cut dividends back in 2008. they came back. airlines have joined banks as being too large to fail. why are we only talking about eliminating dividends and not wiping out shareholder equity in exchange for a government bail-out?

Realist
Realist

Hi Sechel. I invest in many asset classes all over the world. Some of my favorite stocks are Canadian Banks. The big 5, have all been paying dividends since 1829 to 1870, depending on which of the five you are looking at. The last time one of these Canadian Banks has even lowered a dividend was 1940. It will be interesting to see if any of them will cut their dividends during this crisis.

Bam_Man
Bam_Man

Benjamin Graham (the "Father of Value Investing") once famously said that "The only reason to own equities is for the dividends."

So, with no dividends, little-or-no-earnings and debt-impaired balance sheets, I would say that if you are not a "completely devoted member of the cult-of-equities", these things are actually quite worthless.

Carl_R
Carl_R

Stock dividends are mathematically identical to stock buybacks, so if you are going to ban one, you should ban the other. That way the employees and managers can keep any profits.

Ted R
Ted R

Their stocks go down.

Tony Bennett
Tony Bennett

But but someone here was pimping doing just that a few weeks ago (XOM).

Good luck.


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