The Tell: Shareholder returns will fall 40% this year, Goldman says. Here are some safe dividend plays
Goldman reckons dividend payments will fall 23% this year
It’s hard out there for anyone depending on investments for income.
Even as bond yields
have fallen to all-time lows, companies are reducing dividends. So far this year, at least 30 S&P 500 index
companies have announced plans to lower their dividends or cut them altogether, according to an analysis from Goldman Sachs.
Goldman’s research shows investors should expect overall dividends to fall 23% in 2020, but also offers some suggestions on companies that have strong balance sheets and are likely to preserve their dividends.
The table below shows the top company in each S&P 500 sector that meets Goldman’s criteria of “high dividend yields, healthy balance sheets, and reasonable payout ratios.”
|Company, by sector||Annual dividend yield||Consecutive quarters without dividend reduction|
|Omnicom Group Inc.
|Home Depot Inc.
|Wells Fargo & Co.
|Merck & Co. Inc.
|Raytheon Technologies Corp.
|International Business Machines Corp.
|CenterPoint Energy Inc.
|Source: Goldman Sachs analysis|
It’s not just dividends that will suffer in the cash-strapped downturn. Goldman forecasts a 50% decline in share buybacks. Between those two categories, overall return to shareholders will fall 40% from last year.
The forecast also calls for a 9% decline in research and development, and for a 27% reduction in capital expenditures, a reminder that businesses are prioritizing survival over growth and innovation.