Companies That Have Cut Dividends Because Of COVID-19
Companies like Ford and Macy’s had to temporarily suspend dividend payments due to the economic downturn caused by the outbreak.
In times of unprecedented crisis, such as the COVID-19 outbreak, companies need to make tough decisions to survive. When the first panic hit Wall Street, stock prices fell as investors struggled to protect themselves. Another unfortunate side effect is that many publicly traded companies should start new policies such as reducing capital spending, reducing operating costs and adjusting dividend payments.
All this is done to maximize cash flow, but reducing dividend payments can be particularly painful for investors. Some companies have reduced these, while others have suspended dividend payments for now.
On March 19, 2020, Ford announced that its 15 percent quarterly dividend (per share) was suspended. The day before, they had closed production at all North American plants. Ford also provided $ 30 billion in cash for operating costs, withdrawing more than $ 15 billion in two lines of credit. According to Morningstar analyst David Whiston, this basically puts Ford in lockout mode. ”
Alaska Air Group has suspended its cash dividend from March 25, and also earned $ 400 million from a credit line. Additional steps were taken to protect the company, such as a second loan of $ 425 million, suspension of employee salary increases and salary cuts for senior executives. CEO Bradley Tilden received a 100% fee reduction.
Delta Air Lines said five days ago that the board voted to suspend dividend payments after the coronavirus crisis.
On March 18, Marriott International suspended 48 percent of dividend per share. As a key player in the travel industry, the company has been hit hard with low occupancy rates worldwide. Marriott also stops all share purchases, cuts investments and lowers payroll.
Boeing had to suspend its dividends and extend its pause on share repurchases, as reported by CNBC on March 20. A Boeing representative said the company “uses all its resources to maintain operations”. The company also canceled the CEO fee and is looking for $ 60 billion in US government aid. Boeing faced a crisis after the 737 Max jetliner got involved in fatal accidents.
Media giant Gannett has more than 260 daily publications, including the US TODAY. The company suspended its dividend on April 1 and launched other cost-cutting measures. Gannett’s President and CEO, Michael Reed, said he expects Gannet to be significantly affected by the “COVID-19 outbreak”. The company has taken measures to strengthen its balance sheet and liquidity.