Friday, March 5, 2021

The pandemic cuts global dividends by $ 220 billion

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Global dividend distributions fell sharply in 2020 due to the outbreak of the Coronavirus pandemic, as investor payments fell 12.2% to $ 1.26 trillion, according to recent research.

With the spread of the international public health crisis around the world, which caused the imposition of closures and the curtailment of commercial activity, the total profit cuts and cancellations amounted to $ 220 billion, between the second and fourth quarters of 2020, according to an analysis by Asset Manager, “Janus Henderson” of index data Global dividend distribution.

However, the total amount of dividends paid between April and December was $ 965.2 billion, indicated the Janus Henderson Group, which analyzes dividends paid by the 1,200 largest companies by market value before the start of each year.

According to what was reported by “CNN.” that. B. Dividend cuts have been steeper in the United Kingdom and Europe, with both accounting for more than half of total cuts globally.

This is mainly due to regulators forcibly cutting bank profits.

Flexibility of the United States

Nevertheless, dividend payments were flexible in the US, rising 2.6% in 2020.

The report found that North America performed well mainly because companies were able to maintain cash and protect their profits by suspending or reducing share buybacks, and because regulators were more lenient with banks.

Elsewhere in the world, Australia was severely affected … but China, Hong Kong and Switzerland joined Canada as the top performers.

The decline in total profits in 2020 to $ 1.26 billion was slightly less than Janus Henderson’s forecast, which was indicating that profits could fall by $ 1.21 trillion at best, thanks to a less severe than expected drop in fourth-quarter payments, which fell Increased 14% to a total of $ 269.1 billion.

On a sectoral basis, banks accounted for a third of the global profit cuts in terms of value, with dividends reduced by about $ 54 million and the cancellation of $ 34 million within the industry, more than three times the oil producers – the second most affected sector – which saw the reduction and elimination of more than Slightly over $ 24 million in payments.

Banks in the United Kingdom and the euro zone have been subject to a temporary ban on shareholder payments since last March, amid fears of a capital decline in banks as the coronavirus crisis spreads.

However, the BoE said, in December, that banks could resume limited dividends, while Britain’s Barclays Bank recently announced that it would resume dividends to shareholders.

Expectations

Looking at the year 2021 and with the introduction of Corona vaccines, which increased expectations that economies could reopen significantly by summer, the “Janus Henderson” Foundation expected a continued decline in payments in the first quarter of 2021, although the decrease may be less than the decline recorded between the two quarters The second and fourth of the year 2020.

She indicated that the forecast for the entire year 2021 is still very uncertain, especially since the epidemic has intensified in many parts of the world, even when there is hope arising from the availability of vaccines.

Most importantly, bank dividends will resume in the countries in which they have declined, but will not approach 2019 levels in Europe and the United Kingdom, and thus this will limit the growth potential.

The best case scenario predicted by Janus Henderson indicates the possibility of 2021 dividends rising by 5% on a major basis, bringing their total value to $ 1.32 trillion.

The article The Pandemic Cuts Global Dividend $ 220 billion was written in the Al-Borsa newspaper.

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The pandemic cuts global dividends by $ 220 billion