The Coming Recovery in Dividends
2020 will be long remembered for many things. For those Australian investors reliant on dividends as an income stream, 2020 will be remembered as a dividend drought. In the face of a global pandemic and economic uncertainty, Australian corporates cut dividends as revenues stopped and JobKeeper was introduced – an understandable strategy. The upside is that emergency capital raisings were far lower than originally feared and significantly less than during the 2008/09 Global Financial Crisis – we explore this in greater detail below.
We believe that the lack of widespread, dilutive capital raisings is an important launchpad for a recovery in dividends. Investor sentiment has now turned – quite significantly. The economic recovery is underway, and we expect this to translate into a better 2021 for income focused investors.