The Impact of the Covid-19 Crisis on Common Stock Dividend Payout Policy

Wenjing Wang,Arthur S Guarino

doi:10.22158/rem.v5n4p68

Abstract

For many investors, dividends play a key role in evaluating the return of a common stock and the main reason for making the investment. For those investors, dividends are a necessary aspect since they are a vital source of income. But with the Covid-19 pandemic, many corporations have been adversely affected by a global economic slowdown. For publicly traded corporations, depending on its industry, dividends have been sharply affected to the point of either being reduced or suspended indefinitely. Using the Standard and Poor’s 500 stock index as a guide, stock analysts can possibly acquire a better understanding as to how reduced or suspended dividend income will affect different investors. The aim and purpose of this paper is to examine the affect the reduction and suspension of dividends will have as a source of needed income for private investors, pension funds, mutual funds, insurance companies, and real estate investment trusts.

Highlights

The Covid-19 pandemic has been devastating many nations in terms of the people who have become ill, the number of deaths from the disease, and the medical costs incurred by countries, and from an economic and financial perspective
The aim and purpose of this paper is to examine the affect the reduction and suspension of dividends will have as a source of needed income for private investors, pension funds, mutual funds, insurance companies, and real estate investment trusts
The aim and purpose of this paper is to examine how the reduction and suspension of dividends will have on investors and its affect as a source of needed income for private investors, pension funds, mutual funds, insurance companies, and Real Estate Investment Trusts (REITs)

Summary

Introduction

The Covid-19 pandemic has been devastating many nations in terms of the people who have become ill, the number of deaths from the disease, and the medical costs incurred by countries, and from an economic and financial perspective. The Bank of Japan announced on March 16th its enhancement monetary policy regarding the novel coronavirus outbreak with three easing measures It would further increase holdings in Japanese government bonds and the U.S dollar supplied operations. With millions of jobs lost, a public health emergency, and a financial depression, the United States federal government issued massive bailouts and stimulus policies in response to the pandemic. Allan Sloan (2020) notes that the four biggest American airlines and the aerospace giant, Boeing, purchased their own stocks over the years in order to increase their earnings per share In this manner could they keep their stock price stable, or even going up, despite experiencing huge earnings losses. The amount of Marriott’s dividends surged from U.S.$56.8 million to U.S.$156.96 million with a growth rate of 176%

Result

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Discussion