How will this market effect dividends?

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Wad
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How will this market effect dividends?

Post by Wad » Thu Mar 19, 2020 9:28 pm

Normally around this time of the year Vanguard FTSE All-World UCITS ETF (VWRD) declares dividends. However considering the current situation, what can I reasonably expect?

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billthecat
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Re: How will this market effect dividends?

Post by billthecat » Thu Mar 19, 2020 9:35 pm

I was wondering that too. The Schwab website gives a projection of the dividends to expect over the year, and over the last few weeks my projection has dropped significantly, about 30%. I’m not sure why.
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ResearchMed
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Re: How will this market effect dividends?

Post by ResearchMed » Thu Mar 19, 2020 9:58 pm

At least a few companies have already announced suspending dividends.

RM
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tibbitts
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Re: How will this market effect dividends?

Post by tibbitts » Thu Mar 19, 2020 10:00 pm

I think those are accumulated dividends. Even Carnival paid me a dividend - the usual amount - in the last few days. I think it's more of a question going forward.

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ResearchMed
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Re: How will this market effect dividends?

Post by ResearchMed » Thu Mar 19, 2020 10:06 pm

tibbitts wrote:
Thu Mar 19, 2020 10:00 pm
I think those are accumulated dividends. Even Carnival paid me a dividend - the usual amount - in the last few days. I think it's more of a question going forward.
I didn't pay attention to the "effective date" for the changed policies.
But I assume it would be "going forward", because they would need at least some time to implement the change.

RM
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Hector
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Re: How will this market effect dividends?

Post by Hector » Thu Mar 19, 2020 10:33 pm

billthecat wrote:
Thu Mar 19, 2020 9:35 pm
I was wondering that too. The Schwab website gives a projection of the dividends to expect over the year, and over the last few weeks my projection has dropped significantly, about 30%. I’m not sure why.
It is not unusual for companies to cut the dividend in tough times.

oken
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Re: How will this market effect dividends?

Post by oken » Thu Mar 19, 2020 10:42 pm

billthecat wrote:
Thu Mar 19, 2020 9:35 pm
I was wondering that too. The Schwab website gives a projection of the dividends to expect over the year, and over the last few weeks my projection has dropped significantly, about 30%. I’m not sure why.
30% is roughly how much the overall market has dropped...

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BenfromToronto
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Re: How will this market effect dividends?

Post by BenfromToronto » Thu Mar 19, 2020 11:34 pm

During the last 11 Bear markets since WWII, dividends have decreased only -2% on average (range: -23% to +46%) when the S&P500 had dropped -32% on average (range: from -57% to -20%).
I expect this drop to be on the higher side (i.e., we are not done; it could go down another 30%) and the decrease in dividend to be also on the higher side (i.e., around -30%).
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JoMoney
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Re: How will this market effect dividends?

Post by JoMoney » Thu Mar 19, 2020 11:51 pm

I expect there will be a lot of companies cutting dividends, but who knows...
The S&P 500 High-Dividend index (SPYD) has a trailing yield >5%
Chevron (CVX) and Exxon Mobil (XOM) are "Dividend Aristocrats" with a long history of paying and raising dividends, at current price their trailing yield is >9%
Hard to believe that will be sustained in an environment where bonds yield next to nothing. :|
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Valuethinker
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Re: How will this market effect dividends?

Post by Valuethinker » Mon Mar 23, 2020 2:38 am

JoMoney wrote:
Thu Mar 19, 2020 11:51 pm
I expect there will be a lot of companies cutting dividends, but who knows...
The S&P 500 High-Dividend index (SPYD) has a trailing yield >5%
Chevron (CVX) and Exxon Mobil (XOM) are "Dividend Aristocrats" with a long history of paying and raising dividends, at current price their trailing yield is >9%
Hard to believe that will be sustained in an environment where bonds yield next to nothing. :|
At the current oil price and economic outlook any oil company will struggle to hold its dividend.

One way around that is to halt stock buybacks but keep the dividend.

Another would be to use a script issue ie pay dividend in stock not cash.

XOM, as a result of its legacy as Standard Oil (the core company), has 30% individual stock ownership whereas the average US company is c 10%. Thus it will be extremely resistant to actually cutting dividends. And it is the lowest cost operator of the majors.

But, as BP proved after Deepwater Horizon, "all that is solid melts into air". Dividends of the most blue chip companies can be cut.

It's really a call as to how long this goes on.

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Wad
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Re: How will this market effect dividends?

Post by Wad » Mon Mar 23, 2020 3:17 am

Yesterday VWRD declared a $0.4083 per share dividend. Pretty much normal for this time of year. I imagine the next round of dividends will be lower than average if at all.

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Schlabba
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Re: How will this market effect dividends?

Post by Schlabba » Mon Mar 23, 2020 4:09 am

Wad wrote:
Thu Mar 19, 2020 9:28 pm
Normally around this time of the year Vanguard FTSE All-World UCITS ETF (VWRD) declares dividends. However considering the current situation, what can I reasonably expect?
Historically during the 2008 crisis when stocks crashed more than 50% dividends ‘only’ dropped 25%. During some other crashes dividends held up better.

Dividends usually crash along, but usually not as much as the share prices.

https://www.simplysafedividends.com/int ... ar-markets
Secretly a dividend investor. Feel free to ask why.

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Sandtrap
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Re: How will this market effect dividends?

Post by Sandtrap » Mon Mar 23, 2020 8:39 am

ResearchMed wrote:
Thu Mar 19, 2020 9:58 pm
At least a few companies have already announced suspending dividends.

RM
Ouch!!!! :|

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lostdog
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Re: How will this market effect dividends?

Post by lostdog » Mon Mar 23, 2020 8:49 am

Will dividend investors feel the pain from cut dividends ?
Global Market Cap Equity/1 Year Cash/Bonds || 25x Expenses

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Ramjet
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Re: How will this market effect dividends?

Post by Ramjet » Mon Mar 23, 2020 1:05 pm

List of companies who have cut dividends and/or buybacks

https://www.barrons.com/articles/corona ... 1584961202

andrew99999
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Re: How will this market effect dividends?

Post by andrew99999 » Mon Mar 23, 2020 11:22 pm

Schlabba wrote:
Mon Mar 23, 2020 4:09 am
Wad wrote:
Thu Mar 19, 2020 9:28 pm
Normally around this time of the year Vanguard FTSE All-World UCITS ETF (VWRD) declares dividends. However considering the current situation, what can I reasonably expect?
Historically during the 2008 crisis when stocks crashed more than 50% dividends ‘only’ dropped 25%. During some other crashes dividends held up better.

Dividends usually crash along, but usually not as much as the share prices.

https://www.simplysafedividends.com/int ... ar-markets
I know you were just answering the question but I want to add to this.

It may be true that dividends don't drop as far as the market but this piece of information without further explanation is dangerous because it makes people think that dividends are somehow safer than drawing down.

A dividend is still an withdrawal and by taking dividends instead of reinvesting, you're depleting your portfolio faster than if you reinvested the withdrawal back into your equities and lived off your safe asset classes when equities were low.

This is a perfect example of why a little information can be dangerous.

srt7
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Re: How will this market effect dividends?

Post by srt7 » Mon Mar 23, 2020 11:26 pm

In a spectacular way I would presume. Boeing is one such example.
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BeBH65
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Re: How will this market effect dividends?

Post by BeBH65 » Tue Mar 24, 2020 2:48 am

BenfromToronto wrote:
Thu Mar 19, 2020 11:34 pm
During the last 11 Bear markets since WWII, dividends have decreased only -2% on average (range: -23% to +46%) when the S&P500 had dropped -32% on average (range: from -57% to -20%).
Do you have a reference for this?
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles

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Schlabba
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Re: How will this market effect dividends?

Post by Schlabba » Tue Mar 24, 2020 5:05 am

BeBH65 wrote:
Tue Mar 24, 2020 2:48 am
BenfromToronto wrote:
Thu Mar 19, 2020 11:34 pm
During the last 11 Bear markets since WWII, dividends have decreased only -2% on average (range: -23% to +46%) when the S&P500 had dropped -32% on average (range: from -57% to -20%).
Do you have a reference for this?
It is also in the link I posted: https://www.simplysafedividends.com/int ... ar-markets
andrew99999 wrote:
Mon Mar 23, 2020 11:22 pm
Schlabba wrote:
Mon Mar 23, 2020 4:09 am
Wad wrote:
Thu Mar 19, 2020 9:28 pm
Normally around this time of the year Vanguard FTSE All-World UCITS ETF (VWRD) declares dividends. However considering the current situation, what can I reasonably expect?
Historically during the 2008 crisis when stocks crashed more than 50% dividends ‘only’ dropped 25%. During some other crashes dividends held up better.

Dividends usually crash along, but usually not as much as the share prices.

https://www.simplysafedividends.com/int ... ar-markets
I know you were just answering the question but I want to add to this.

It may be true that dividends don't drop as far as the market but this piece of information without further explanation is dangerous because it makes people think that dividends are somehow safer than drawing down.

A dividend is still an withdrawal and by taking dividends instead of reinvesting, you're depleting your portfolio faster than if you reinvested the withdrawal back into your equities and lived off your safe asset classes when equities were low.

This is a perfect example of why a little information can be dangerous.
I actually believe that, but that is an entire discussion in itself, maybe not for this thread :happy
Secretly a dividend investor. Feel free to ask why.

Valuethinker
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Re: How will this market effect dividends?

Post by Valuethinker » Tue Mar 24, 2020 1:14 pm

lostdog wrote:
Mon Mar 23, 2020 8:49 am
Will dividend investors feel the pain from cut dividends ?
Yes.

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BeBH65
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Re: How will this market effect dividends?

Post by BeBH65 » Wed Mar 25, 2020 2:09 am

Schlabba wrote:
Tue Mar 24, 2020 5:05 am
BeBH65 wrote:
Tue Mar 24, 2020 2:48 am
BenfromToronto wrote:
Thu Mar 19, 2020 11:34 pm
During the last 11 Bear markets since WWII, dividends have decreased only -2% on average (range: -23% to +46%) when the S&P500 had dropped -32% on average (range: from -57% to -20%).
Do you have a reference for this?
It is also in the link I posted: https://www.simplysafedividends.com/int ... ar-markets

"average"

One can drown in a river of an average depth of 1m.

The table at the bottom of this post form your article shows that dividends declined 23% in the 2008-2009 period.
Actually choosing to end the analysis in 2009 is remarkable, as dividends cuts tend to continue even after the bottom is reached.

Here are some numbers of the S%26P_500_Dividend_Aristocrats in 2009 en 2010.
https://en.wikipedia.org/wiki/S%26P_500_Dividend_Aristocrats wrote: 2009 - The list declined from 52 companies in 2008 to 43 companies in 2009
2010 - A second round of ten companies were dropped
Here are some additional graphs of what happened to dividends in the eurozone in that period.
(reference:: AXA - dividend-investing-in-eurozone-equity-markets

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Schlabba
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Re: How will this market effect dividends?

Post by Schlabba » Wed Mar 25, 2020 5:17 am

BeBH65 wrote:
Wed Mar 25, 2020 2:09 am
Schlabba wrote:
Tue Mar 24, 2020 5:05 am
BeBH65 wrote:
Tue Mar 24, 2020 2:48 am
BenfromToronto wrote:
Thu Mar 19, 2020 11:34 pm
During the last 11 Bear markets since WWII, dividends have decreased only -2% on average (range: -23% to +46%) when the S&P500 had dropped -32% on average (range: from -57% to -20%).
Do you have a reference for this?
It is also in the link I posted: https://www.simplysafedividends.com/int ... ar-markets

"average"

One can drown in a river of an average depth of 1m.

The table at the bottom of this post form your article shows that dividends declined 23% in the 2008-2009 period.
Actually choosing to end the analysis in 2009 is remarkable, as dividends cuts tend to continue even after the bottom is reached.

Here are some numbers of the S%26P_500_Dividend_Aristocrats in 2009 en 2010.
https://en.wikipedia.org/wiki/S%26P_500_Dividend_Aristocrats wrote: 2009 - The list declined from 52 companies in 2008 to 43 companies in 2009
2010 - A second round of ten companies were dropped
Here are some additional graphs of what happened to dividends in the eurozone in that period.
(reference:: AXA - dividend-investing-in-eurozone-equity-markets

Image
Image




Image
Thanks for the link. I will read the article later.

For now I must say this is very confusing. When we talk about dividends what do we mean?

The article I linked talks about the US market. The article you linked is the European stock market. Then the graphs you highlighted are a non-financials, a high yield index (taking the top 25% of dividend payers where the Vanguard takes the top 50% of dividend payers for its high yield index), a dividend growth index and some policy of dividends. You also mentioned the s&p aristocrats.

It seems we are doing an apples and oranges this way.

Just to add some more data, here is the total market dividend payouts for 2014. Not nearly as bad as the article suggests: https://finance.yahoo.com/quote/VT/hist ... equency=1d
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Luigi
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Re: How will this market effect dividends?

Post by Luigi » Thu Mar 26, 2020 3:00 pm

In Sweden, many companies have either slashed or removed dividends. The dividend investors are having a rough spring to say the least.

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