2020 was a very challenging year for all forecasters – with dividends many were cancelled, delayed or suspended – with the UK and EU in particular hit hard. Companies reacted fast and many governments combatted the virus by reducing social interaction with sudden, long and repeated lockdowns.
Sectors reliant on physical contact suffered most: non-essential travel, hospitality (ranging from restaurants / bars to sports stadiums), and non-essential physical retailers. Internet sales became a big winner, and adaptability to the ‘new normal’ key to survival.
Over time, less badly affected sectors have reinstated dividends, and many cancelled dividends from early 2020 have now been paid.
Looking forwards markets expect a strong recovery globally and ‘business as usual’ is anticipated. However, even with huge pent up demand for travel, entertainment and retail the worst affected sectors may take years to recover from a dividend paying perspective, as many companies will need time to rebuild their balance sheets.
Mark Riding, Head of Research
Delivered as EagleAlpha newsletter content 19th March 2021