A quarter of the 600 largest listed companies in Europe have already suspended or cancelled dividend payments for this year, according to a study by Germany’s DZ Bank. As a consequence, total dividend payouts are to fall by some €310 billion.
The bank’s analysts write that ‘an unprecedented cancellation of dividend payments is rolling over European stock markets’. They estimate 2019 payouts to fall by 23%, or €310 billion.
DZ Bank’s estimates are much more dramatic than earlier predictions. So far, analysts have been on average assuming falls in dividend payments for 2020 of just 14%. Last month, for example, German private bank Merck Finck said it expected a 10% drop in dividend payouts for 2020, compared to 2019, for the German DAX index. European companies’ dividend yields have skyrocketed in recent years, propelling share prices to record highs.
‘We expect further dividend yield suspensions for listed companies in the coming months,’ Michael Bissinger of DZ Bank told the daily Handelsblatt. The bank estimates that up to 40% of companies included in the Stoxx 600 will not pay any dividend over 2019.
This would be comparable to the Great Financial Crisis of 2008 and 2009. Dividend suspensions have occurred mainly for banks - as called for by the European Central Bank - as well as in industrial companies and the tourism and retail sectors. Sectors such as chemicals, telecommunications and health, have so far mostly protected their dividend payments to shareholders.