These strong dividend payers sank with the stock market — and now their yields have s

Beware high yields. Most will be cut. Article below is for stocks in FTSE but applicable worldwide.

Here’s AJ Bell’s Russ Mould: “A one-off suspension of the dividend could give some companies some breathing space if they are financially stretched by the coronavirus disruption. However, it mustn’t be an excuse for any company to stop payments simply because some of the peer group are doing it.” Russ highlights the danger for investors eyeing a forward dividend of 6.5 per cent for the FTSE 100, when cash is zero and a 10-year gilt yields 0.5 per cent: “Earnings cover of 1.68 times was thinner than ideal before the viral outbreak knocked the global economy and a slowdown or downturn will leave many dividends exposed and at risk of a cut, so that yield figure could prove to be deceptive.”

https://www.ft.com/content/52cfcd06-687e-11ea-800d-da70cff6e4d3
 
Back
Top