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Dividends to crash 30%+ in 2020! What should you do?

first_imgDividends to crash 30%+ in 2020! What should you do? Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Simply click below to discover how you can take advantage of this. “This Stock Could Be Like Buying Amazon in 1997” The investing landscape is becoming more and more perilous for dividend seekers.Firms of all shapes and sizes are axing dividends like there’s no tomorrow. Irrespective of the segments in which they operate, and thus how badly affected they will be likely hit by the coronavirus outbreak, dividends are toppling like dominos as fears over future profits mount. Even firms with robust balance sheets are taking the decision to stop payouts to conserve cash.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Dividends are on the slideThe extent of the dividend cutting was underlined by Link Group figures released today. These show that an eye-popping 45% of companies have already brought the blade down on shareholder rewards. This amounts to a whopping £25.4bn worth of dividends between now and the end of 2020, it estimates. Payments worth an aggregated £17.5bn have already been paid in the first quarter.To put this decline into context, the financial data provider comments that “this represents one third of the dividends [we] had expected UK plc to pay over the rest of this year before the Covid-19 crisis struck.”With the coronavirus outbreak far from beaten, it is clear that investors should be prepared for more dividend cutting in the months ahead. Link Group estimates that a further £23.9bn worth of rewards could be at risk for this year. It considers a total of just £31.1bn to be safe.Cuts are comingWhatever happens from now on, it looks as if annual dividends will fall off a cliff in 2020. Under its most realistic ‘best case’ scenario, Link Group anticipates that total dividends this year will fall 32% from 2019 levels to £67.3bn. This assumes that oil companies will pay out in full but that half of the firms in the ‘At Risk’ group (see chart) will cancel payments.Source: Link GroupMeanwhile, according to its most realistic ‘worst case’ playbook, Link Group says that half of the ‘At Risk’ dividends will topple along with those from oil producers. Energy accounts for half of all the group’s dividends, though Link Group notes that a full cancellation of payouts is highly unlikely.Under this scenario, total dividends would plummet 39% year on year to £60bn.Yields are droppingSo what does this mean for yields? Well under Link Group’s ‘best case’ scenario, the reading for the next 12 months comes out at 3.9%. As the firm notes, this is still above the 30-year average figure of 3.5%.Things look much scarier under the ‘worst case’ synopsis, though. Under these circumstances the yield would sit at just 2%, a low not plumbed since the depths of the dotcom crisis two decades ago.These are unprecedented times, at least from a modern perspective. It means that share pickers need to be extra careful when it comes to filling their shares portfolio. But the worst thing investors can do is to pull up the drawbridge entirely. With the right guidance it is still possible to make big returns from share markets. And there’s plenty of brilliant bargains out there following the recent sell-off. Our 6 ‘Best Buys Now’ Sharescenter_img Image source: Getty Images. Royston Wild | Thursday, 9th April, 2020 Enter Your Email Address I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! See all posts by Royston Wildlast_img


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