Connect with us

Business

Covid cuts third-quarter dividends to lowest level since 2016 | UK news

Published

on

The economic turmoil caused by the Covid-19 pandemic pushed third-quarter shareholder payouts to their lowest level since 2016, according to the latest snapshot, with the UK recording the biggest falls.

Janus Henderson is now warning that dividends for the whole of 2020 are likely to drop at least 15.7%, which would “eradicate” more than three years of dividend growth and cost investors $224bn (£170bn) in lost income this year.

The asset manager’s latest Global Dividend Index shows shareholder payouts slumped 14.3% or $55bn in the third quarter to $329.8bn. It comes after nearly a third of the 1,200 global firms tracked by the report either cut or cancelled their shareholder payouts for the quarter.

Overall, the largest declines came from non-essential consumer goods companies, where dividends were down 43% on an underlying basis – which is an adjusted figure accounting for special dividends, foreign exchange and the timing of payouts. Dividends from car manufacturers and leisure firms suffered the biggest cuts in that sector.

Media, aerospace and banks were also severely affected, while pharmaceuticals, food producers and food retailers offered the largest payouts over the quarter.

The UK was the hardest-hit region, with dividends falling 47% on a headline basis to $18.7bn. That was partly due to a regulatory ban on bank dividends throughout 2020, meant to provide a larger capital cushion to weather an economic downturn linked to Covid-19.

The Bank of England is currently reviewing that position and could allow lenders to restart payouts in 2021. A decision is expected in December.

UK dividends were also hit by lower payouts from oil and mining giants such as BP, Royal Dutch Shell and Anglo American, while Glencore cancelled its dividend. The cuts have come amid a sharp fall in commodity prices, due to falling fuel demand and a slowdown in manufacturing.

Australian dividends also fell sharply, down more than 40% to $9.6bn, which marked the lowest third quarter total in at least 11 years. The Netherlands was also severely impacted by a drop in payouts from its banks and brewers.

Jane Shoemake, an investment director at Janus Henderson, said the global dividends would continue to fall in the first three months of 2021, “but then things should pick up.”

“The big question mark is over the decisions the regulators in the UK, Europe and Australia will make around banking payouts. And of course, so much depends on the pandemic and the severity and duration of any further lockdown,” Shoemake added.

US companies, which usually account for around 40% of the world’s dividends, suffered a much smaller decline, with shareholder payouts falling just 3.9% in the third quarter. Around 80% of US companies held or increased their payouts, deciding instead to launch smaller share buy-backs to help preserve cash.

In China, where the third quarter usually results in the highest payouts, dividends were 3.3% higher than a year earlier. Three quarters of Chinese firms either increased dividends or maintained dividend levels. Hong Kong and Canada were also among the few countries to see dividends rise.

Janus Henderson is now predicting flat dividend growth on an underlying basis in 2021, but shareholder payouts could jump by 12% according to its most optimistic forecasts.


Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

Customers will see only benefits

Published

on

By

David McInerney, CEO, FreshDirect

Source: CNBC

FreshDirect customers have nothing to fear after the company was bought by the Dutch owner of Stop & Shop and Food Lion, the grocery delivery service’s CEO said Tuesday.

Ahold Delhaize and Centerbridge Partners, a private equity firm, announced Wednesday that they would be buying FreshDirect. Financial terms of the deal were not disclosed, but Ahold Delhaize will acquire a majority stake and Centerbridge Partners will have a minority investment of 20%.

“Hopefully the only differences that customers see are the benefits,” FreshDirect CEO David McInerney said on CNBC’s “Squawk Box.”

The Dutch company already has a foothold in U.S. grocery e-commerce through Peapod, which was the first company in the country dedicated to online grocery delivery. But FreshDirect’s specialty is fresh food, which represents about 60% of its total sales, and it has a higher market share than Peapod in the New York tri-state area.

McInerney said that he appreciated how Ahold Delhaize plans to preserve the e-commerce company’s brand. FreshDirect will keep its name and will still independently operate its New York City facility.

“I think combining the knowledge of both companies, we can make it even more competitive and compelling,” Ahold Delhaize CEO Frans Muller said.

Stockpiling during the early days of the coronavirus pandemic made online grocery sales soar, and the trend seems to be sticking. Muller said that the pandemic accelerated Ahold Delhaize’s e-commerce business by several years.

“Being that we’re on top of our game right now … strong double digit-growth, we were naturally attractive, given where the world is in terms of adoption of online food,” McInerney told CNBC’s Becky Quick.

The deal is expected to close in the first quarter of 2021.

Correction: David McInerney is CEO of FreshDirect. An earlier version misspelled his name.


Source link

Continue Reading

Business

Trump administration officials speak on Covid vaccine distribution

Published

on

By

[The stream is slated to start at 11:15 a.m. ET. Please refresh the page if you do not see a player above at that time.]

The departments of Health and Human Services and Defense are holding a joint briefing Tuesday on the Trump administration’s coronavirus vaccine program Operation Warp Speed as states prepare to distribute doses as early as next month.

The briefing comes four days after Pfizer and its partner BioNTech applied for an emergency use authorization from the Food and Drug Administration for their Covid-19 vaccine. The FDA process is expected to take a few weeks, and an advisory committee meeting to review the vaccine has been scheduled for early December.

Pfizer announced on July 22 that the U.S. agreed to buy 100 million doses of its vaccine for up to $1.95 billion. The agreement, which is part of Operation Warp Speed, allows the U.S. to acquire an additional 500 million vaccine doses.

Read CNBC’s live updates to see the latest news on the Covid -19 outbreak.


Source link

Continue Reading

Business

Cramer calls this stock market ‘the most speculative’ he’s ever seen

Published

on

By

Jim Cramer

Scott Mlyn | CNBC

CNBC’s Jim Cramer said Tuesday that some of the stock gains in the market are “insane,” with investors recently buying certain names from Tesla to Royal Caribbean seemingly without regard for fundamentals or the state of the coronavirus pandemic and holding onto them.

“Where are the profit takers” after these dizzying moves higher? the “Mad Money” host asked.

Cramer called the current environment “the most speculative market I’ve ever seen,” hitting on a recent theme in which he’s been dumbfounded by the kinds of moves in so-called Robinhood stocks, names being gobbled up on the online trading platform favored by younger investors.

“You can’t lose in that market,” he said, adding “it’s like a slot machine” that always pays out. “I’ve not seen this in my career,” stressed Cramer, who came to Wall Street in the mid-1980s after joining Goldman Sachs and later became a hedge-fund manager before becoming a financial journalist.

Cramer questioned how this type of buying can continue, pointing out that in the past such speculation has been met with a big sell-off. However, he pointed out that such a downturn has not happened yet despite coronavirus cases in the U.S. and around the world hitting record after record, which could threaten the nascent economic recovery from the depths of the pandemic in the spring.

In the case of Tesla, Cramer called it a technology company not just an automaker. He said that Tesla’s more than 500% gain this year alone could not be justified any other way.

Cramer has been a fan of Tesla for a while, even buying one of the electric vehicles. “These are ridiculous” moves, he said but added it’s not 1999, referring to the dotcom bubble that later burst. “Investors just like Tesla,” he argued. The strong move in Tesla shares Tuesday pushed the company to a $500 billion stock market value.

The Dow Jones Industrial Average opened about 300 points higher Tuesday, with the Trump administration approving Joe Biden‘s transition and the president-elect set to pick former Federal Reserve Chair Janet Yellen as Treasury secretary. A day earlier, the Dow soared 327 points after AstraZeneca and Oxford said their Covid-19 vaccine was up to 90% effective, in a third straight Monday of encouraging late-stage trial data.

Tuesday’s trading featured so-called reopening stocks like airlines and cruise lines getting another boost. Tech stocks — seen as beneficiaries of the pandemic stay-at-home economy, which would abate in a post-vaccine world — were steady after a rough Monday that put a cap on the Nasdaq’s gains.


Source link

Continue Reading

Breaking News

Shares