{"id":143482,"date":"2020-04-21T02:00:48","date_gmt":"2020-04-21T02:00:48","guid":{"rendered":"https:\/\/www.bnreport.com\/coronavirus-may-change-shareholder-dividend-landscape-permanently\/"},"modified":"2020-04-21T02:00:48","modified_gmt":"2020-04-21T02:00:48","slug":"coronavirus-may-change-shareholder-dividend-landscape-permanently","status":"publish","type":"post","link":"https:\/\/www.bnreport.com\/en\/coronavirus-may-change-shareholder-dividend-landscape-permanently\/","title":{"rendered":"Coronavirus may change shareholder dividend landscape permanently"},"content":{"rendered":"<p>There have been many devastating side-effects left in the path of the novel coronavirus as it has ripped across the globe in the past four months.<\/p>\n<p>As well as the devastating cost to some families and communities, one the most obvious to investors and retirement savers is the destruction of corporate dividend income, with UK companies having scrapped around \u00a330bn worth of dividends so far in 2020.<\/p>\n<p>So, among the various questions that are being asked by financial analysts \u2014 what will the world look like after pandemic tails off, which behaviour will remain unchanged, will there be a new normal \u2014 is whether the world of shareholder distributions be changed.<\/p>\n<p>Those companies that maintain their dividend and\/or share buybacks during the coronavirus crisis \u2014 as with any downturns \u2014 is usually a sign of confidence in the resilience of their operating business models.<\/p>\n<p>When cash flows recover from the corona-crisis companies could return to prior practice \u2013 but there is a possibility that this may become \u201cuntenable\u201d from now on, analysts at UBS have warned, and so it is not possible to simply predict that things will return to normal.<\/p>\n<p>\u201cWe are not convinced distributions will return in the same fashion as and when (or if) cash becomes available,\u201d said the bank&#039;s sustainability research team, led by Victoria Kalb.<\/p>\n<h4><a href=\"https:\/\/www.proactiveinvestors.co.uk\/companies\/news\/917027\/uk-dividend-income--at-risk--of-halving-in-2020-due-to-coronavirus-917027.html\" rel=\"noreferrer noopener\" target=\"_blank\">READ: UK dividend income &#039;at risk&#039; of halving in 2020 due to coronavirus<\/a>[hhmc]<br \/>\n<\/h4>\n<p>Under a worst-case scenario suggested this month by Link Group, dividends for the whole of 2020 could halve from their previous forecast level, resulting in the UK dividend yield dropping to 2% for the next twelve months, well below the 3.5% average for the past 30 years.<\/p>\n<p>In a best-case scenario, which would only include cuts that have so far been announced or flagged, dividends would still fall 29% from their forecast level to \u00a370.4bn.<\/p>\n<p>But Kalb and her team suggest it will be difficult for things to return to normal and that the dividend landscape may be permanently changed.<\/p>\n<p>One key reason is that Covid-19 has brought much greater visibility and attention upon the social element of ESG and an increased focus on inequality, the analysts say.<\/p>\n<p>\u201cWhile it is, of course, too early to know if attitudes have changed permanently, closer scrutiny of social issues may make it more difficult to continue with (or restart) distributions in line with prior practice,\u201d Kalb and the team wrote.<\/p>\n<p>Of course distributions will resume, but the analysts think dividends \u201ccould be less controversial than buybacks\u201d as dividends are seen as strategic&#039; versus buybacks being tactical.<\/p>\n<h4><strong>What is a fair distribution, what is &#039;excess&#039; cash?<\/strong>[hhmc]<br \/>\n<\/h4>\n<p>The definition of what is considered to be an optimal stakeholder balance also perhaps faces permanent alternation to reflect the greater dominance of the S in ESG than before the pandemic.<\/p>\n<p>On a fundamental level, it seems quite possible that there will be less excess cash available to pa<a href=\"https:\/\/www.proactiveinvestors.co.uk\/companies\/news\/917667\/coronavirus-may-change-shareholder-dividend-landscape-permanently-917667.html\" rel=\"noreferrer noopener\" target=\"_blank\">Read More \u2013 Source<\/a><br \/>\n[contf]<br \/>\n[contfnew]<br \/>\n        <img decoding=\"async\" src=\"https:\/\/webfiles.thecse.com\/PRO_LOGO_P_COLOUR.png?sYToe11NLbcXiyGkVa5syF9WB04cy98G\" \/><\/p>\n<h5><a href=\"https:\/\/www.proactiveinvestors.co.uk\/\" rel=\"noreferrer noopener\" target=\"_blank\">Proactiveinvestors<\/a><\/h5>\n<p>[contfnewc]<br \/>\n[contfnewc]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>There have been many devastating side-effects left in the path of the novel coronavirus as it has ri..<\/p>\n","protected":false},"author":1,"featured_media":143483,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[46],"tags":[],"class_list":["post-143482","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-politics"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Coronavirus may change shareholder dividend landscape permanently - Business News Report<\/title>\n<meta name=\"description\" content=\"There have been many devastating side-effects left in the path of the novel coronavirus as it has ri..\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bnreport.com\/en\/coronavirus-may-change-shareholder-dividend-landscape-permanently\/\" \/>\n<meta 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