Dividends paid out by U.S. companies last year hit a record high, despite the devastation caused by the COVID-19 pandemic that hit the country seriously in the spring of 2020.
In the US, dividends rose 2.6% year over year to $ 503.1 billion last year as a little more than 7%, or one in 14 companies, paid dividends between April and December 2020, according to a report by Janus Henderson Investors lowered.
However, the outlook for dividend payouts in 2021 remains uncertain, although a successful launch of vaccines in the second half of the year should support a recovery in the domestic and international economies, the report said.
The economy and the stock market were shaken last March, and stocks fell from all-time highs with unprecedented rapidity as the severity and scale of the deadly pandemic for US investors was realized. After record highs in mid-February 2020, the Dow Jones Industrial Average DJIA was + 0.00%,
The S&P 500 Index SPX (-0.19%) and the Nasdaq Composite Index COMP (+ 0.07%) fell to their lows on the bear market on March 23.
However, US companies were able to withhold most of the dividends and even increase overall payouts as executives and treasurers voted back stock buybacks.
Matt Peron, research director at Janus Henderson Investors, told MarketWatch via email that buybacks were halved in 2020 to around $ 300 billion last year, compared to a three-year average of around $ 700 billion.
“Buybacks are typically cut before dividends are cut and resumed when companies are confident of maintaining and / or resuming dividend increases,” Peron said.
He noted that buyback announcements are gradually gaining traction, which could suggest that dividends will pick up in 2021 as well.
Globally, dividend cuts and cancellations amounted to around $ 220 billion between April and December 2020, with banks making up a good chunk of those cuts, followed by oil and gas producers – but two-thirds of the world’s companies gained or held Dividends stable.
Banks, in particular, have been forced to cut investor payouts as regulators and executives sought capital to protect themselves from a possible wave of bankruptcies and loan defaults.
Globally, dividends fell to $ 1.26 trillion last year, down 12.2%. That was still less severe than a drop in Janus’ forecast to $ 1.21 trillion. According to Janus Henderson, the dividend cuts were the toughest in Europe and the UK, accounting for more than half of the total global decline last year.