Important Information
This information is provided for general educational purposes only without regard to your particular investment needs. This material, including any attachments or hyperlinks, should not be taken as investment or tax advice of any kind whatsoever (whether impartial or otherwise) on which you may rely for your investment decisions, nor be construed as an offer, solicitation or recommendation for any investment strategy, product or service. Investors should consult their financial and tax adviser before making investments in order to determine the appropriateness of any investment discussed herein.
Material authored by any particular Artisan Partners individual or team represents their own views and opinions, which may or may not reflect the views and opinions of Artisan Partners, including its autonomous investment teams or associates. Statements are based on current market conditions and other factors, which are as of the date indicated and are subject to change without notice. While this information is believed to be reliable, there is no guarantee to the accuracy or completeness of any statement in the discussion.
All investments are subject to risk, which includes potential loss of principal. Past performance is not indicative of future results.
This material may reference index or other information that is subject to copyright by its respective service provider, including the following: MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indices or financial products. This report is not approved or produced by MSCI. Frank Russell Company ("Russell") is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell's express written consent. Russell does not promote, sponsor or endorse the content of this communication. The S&P 500 and S&P UBS Leveraged Loan Indices are products of S&P Dow Jones Indices LLC (“S&P DJI”) and/or its affiliates and has been licensed for use. Copyright © 2025 S&P Dow Jones Indices LLC, a division of S&P Global, Inc. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. S&P® is a registered trademark of S&P Global and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). None of S&P DJI, Dow Jones, their affiliates or third party licensors makes any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and none shall have any liability for any errors, omissions, or interruptions of any index or the data included therein. Information has been obtained from sources believed to be reliable but J.P. Morgan does not warrant its completeness or accuracy. The Index is used with permission. The Index may not be copied, used, or distributed without J.P. Morgan's prior written approval. Copyright 2025, J.P. Morgan Chase & Co. All rights reserved. Source ICE Data Indices, LLC, used with permission. Source ICE Data Indices, LLC is used with permission. ICE® is a registered trademark of ICE Data Indices, LLC or its affiliates and BofA® is a registered trademark of Bank of America Corporation licensed by Bank of America Corporation and its affiliates ("BofA"), and may not be used without BofA's prior written approval. The index data referenced herein is the property of ICE Data Indices, LLC, its affiliates (“ICE Data”) and/or its third party suppliers and, along with the ICE BofA trademarks, has been licensed for use by Artisan Partners Limited Partnership. ICE Data and its Third Party Suppliers accept no liability in connection with the use of such index data or marks. See www.artisanpartners.com/ice-data.html for a full copy of the Disclaimer. The index(es) are unmanaged; include net reinvested dividends; do not reflect fees or expenses; and are not available for direct investment.
© 2025 Artisan Partners. All rights reserved.
Will Dividends Experience a V-Shaped Recovery?
While not as dramatic as during the global financial crisis, dividends in 2020 have taken a hit: Dividends globally declined some $108 billion to $382 billion in Q2—a 22% YoY drop. An estimated 27% of companies globally cut their dividends, including more than half of European companies. In the UK, 176 companies canceled dividends altogether. The story is slightly different in the US: During the GFC, S&P 500® Index companies’ quarterly dividends fell some 25% (based on the ETF’s dividend)—compared to only 5.6% during the pandemic through the first week of September 2020. Regardless of the magnitude, though, given the dramatic spike in uncertainty, the seemingly self-preserving response isn’t terribly surprising.
What’s different about this round of dividend cuts is the breadth of sectors impacted. Obviously financials firms were particularly hard-hit in 2008-2009 as they sought to not only preserve capital amid a massive bear market and accompany recessions, but also to respond to increased regulatory scrutiny from governments globally. This year’s pandemic and governmental responses—economic lockdowns and others—seem likely to have further-reaching impacts. Indeed, 8 of 12 sectors are expected to see EPS fall this year—led down by energy, industrials and consumer discretionary. Which could incentivize some to cut dividends in an attempt to maintain guidance.
Regardless, it seems likely many companies will restore dividend payments as uncertainty increasingly fades—though we’d expect with divergence among sectors, industries, even geographies. For example, hotels and airlines seem likely candidates for cuts, while technology companies may be able to continue paying dividends for the crisis’s duration.
Interestingly, companies aren’t universally hesitant to spend money—indeed, data indicate S&P 500® Index companies repurchased shares in Q2, despite collapsing profits. As sentiment improves and the outlook clears, it wouldn’t be surprising to see share repurchases strengthen further.
Even if 2020 is the year of the dividend cuts (among ample other possible monikers), it’s worth noting the dividend yield remains more attractive than the majority of global benchmark bond yields—like the US 10-year Treasury, which as of this writing yields some 73bps. Relative to other major developed world markets—Germany, the UK, Japan—that’s a generous yield. Just one more reason the current backdrop makes many equities seem more attractive than government bonds.
Contact the Editorial Staff
Have a question or comment? We welcome your feedback. Comments will not be made public, but will be read by a member of our editorial staff.
Thank you for your question or comment.