I commented here on how the current collapse in equity values was nothing like the one subsequent to 1929, and speculated “What will the fall in dividends be like? We are about to find out. ”
The market recovered a bit by the close of April (although sharply down again this morning), but dividend news is grim. Yesterday we saw the first cut in the dividend from Royal Dutch Shell since World War Two as it faces the collapse in oil price. Other FTSE 10 stocks with dividend cuts were Sainsbury, Next and Admiral Group.
As of close of business yesterday, 41% of FTSE 100 stocks (which is, er, 41 stocks) have either cut dividends substantially or suspended them altogether.
This does not mean it will be anything like the 1930s, however. Firms pay dividends two or four times a year, and we are assured the market dislocation is temporary (in the overall scheme of things). We have yet to find out the longer term effect on the overall economy, and in particular the effect on the highly leveraged banking sector – on which more next week. Signing off for now, and have a tolerable locked-down weekend.