- As the coronavirus pandemic shuts down economies across the globe, companies are looking to strengthen their balance sheets and conserve as much cash as possible.
- One way companies are conserving cash is pausing stock buyback programs and cutting or entirely eliminating their dividends.
- Here are seven companies that either cut or suspended their dividends in the month of April.
- Visit Business Insider’s homepage for more stories.
As the coronavirus continues to take its toll on the global economy, companies are in survival mode, and many are looking to cut costs, preserve liquidity, and reduce debt to make it out on the other side of the economic shock.
Dividends have been an important source of returns for investors. Since 1926, 40.2% of the S&P 500’s total return can be attributed to dividends, according to The New York Times. In the S&P 500, annual dividends over the last 12 months through March totaled nearly $US500 billion.
Investors have grown used to ever-increasing dividend payments and stock buyback programs over the past decade. But as companies reassess their balance sheets and try to strengthen them in response to the coronavirus pandemic, dividends and stock buybacks could be the first thing companies cut.
Here are eight companies that have either cut or suspended their dividends in the month of April due to the coronavirus pandemic.
1. Invesco cuts dividend 50%
On April 23, Invesco announced it would be cutting its dividend by 50%, from 31 cents per share to 15.5 per share. The company also announced first quarter earnings that missed analysts’ revenue and earnings per share estimates.
The company is also planning to redeem up to $US200 million of seed capital investments to help build up its cash position.
2. Alliance Data Systems cuts dividend 67%
On April 23r Alliance Data Systems cut its dividend 67% from 63 cents to 21 cents a share. The company said more than $US300 million of its $US404 million provision for loan loss increase was due to the coronavirus pandemic.
The company also announced it would be suspending its stock buyback program and is looking at cutting costs to boost its cash position.
3. Schlumberger cuts dividend 75%
On April 17, Schlumberger announced it would be cutting its dividend by 75% from 50 cents to 12.5 cents a share.
The company also announced it would be cutting its 2020 capital spending by as much as 30% from prior year levels due to the coronavirus pandemic.
4. Estee Lauder suspends its dividend
On April 15, Estee Lauder announced it would be suspending its dividend for the next quarter. The dividend would have been paid in June. Prior to the dividend cut, Estee Lauder paid an annual dividend of $US1.92.
Other cash saving actions taken by the company include suspension of its stock buyback program and executive pay cuts ranging from 10% to 30%.
5. Dick’s Sporting Goods suspends its dividend
On April 14, Dick’s Sporting Goods announced it would be temporarily suspending its dividend in response to the economic damage inflicted by the coronavirus pandemic. The company previously paid an annual dividend of $US1.25 per share.
Additionally, the company raised $US500 million in convertible securities and cut its planned 2020 capital expenditures to help build up cash on its balance sheet.
6. Las Vegas Sands suspends its dividend
On April 17, Las Vegas Sands announced it would be temporarily suspending its dividend program. The company previously paid an annual dividend of $US3.16.
Chairman and CEO Sheldon Adelson said, “… we are suspending the dividend so that we have maximum optionality in pursuing our strategic vision and in producing future returns. I commit to my fellow shareholders that we will revisit the suspension of the dividend at the earliest reasonable opportunity.”
Goodyear Tire suspends its dividend
On April 16, Goodyear Tire & Rubber Company announced it would be suspending its dividend. Previously the company paid an annual dividend of 64 cents per share. The company said it had seen “significant declines” in tire shipments after car factories shut down.
The company expects the dividend cuts to save $US37 million a quarter. Additionally, the company is cutting payroll to save cash amid the coronavirus pandemic.
8. General Motors suspends its dividend
General Motors announced Monday morning that it would be suspending its dividend to preserve cash as its factories are shut down due to the coronavirus pandemic. The company previously paid an annual dividend of $US1.52.
The dividend suspension is expected to save General Motors upward of $US1.6 billion in 2020. The company also announced it would be suspending its share buyback program.