Lowest dividends in a long time

BIf you look at the recent price rises on the stock markets, the question can quickly come to mind: “Crisis? What crisis? ”The German share index Dax came close to the mark from 12,000 points to 250 places on Tuesday afternoon. The values ​​in the depots have recovered to such an extent that they enable investors to have a relaxed and peaceful sleep again.

But they continue to feel the Corona crisis, especially in the falling profit distributions. As in one of the F.A.Z. present study Michael Bissinger, analyst at DZ Bank, writes that the dividends payable for the past financial year will drop to the lowest level since the financial crisis.

Deleted or subject to change

The dividend forecasts for the Euro Stoxx 50, the leading index for the euro area, have been reduced by around 20 percent since the beginning of the year and are at their lowest level since 2006, already lower than during the financial and euro debt crisis. “It is currently very difficult to get a precise picture of the situation with the dividends,” admits Bissinger. So far, according to his observation, it is clear: 26 percent of the 86 German companies from the H-Dax, which is made up of Dax, M-Dax and Tec-Dax, pay no or only the minimum dividend.

A further 15 percent of the companies are subject to payment because the general meeting has been postponed. As long as the general meeting has not approved the dividend, it can still be deleted or reduced. According to the dividend calendar of the DZ Bank analysts, Thyssen-Krupp, Osram, Puma, Adidas and Lufthansa, among others, have cut their dividends, which require government aid of over 9 billion euros.

Banks such as Commerzbank, Deutsche Pfandbriefbank and Aareal Bank also had to suspend their profit distribution after the supervisors of the European Central Bank (ECB) asked the institutions not to pay dividends or buy back shares until October. After losing billions in 2019, Deutsche Bank had previously decided not to distribute profits.

It has rarely been so difficult for Bissinger to get an idea of ​​the situation of dividends as it is today. On the one hand, the uncertainties about the further economic development on which the dividend payments depend are very great. On the other hand, it is often not clear whether a company’s dividend will not be paid because the general meeting has been postponed or because it has been canceled due to the tight financial situation. The DZ Bank reserves the dividends announced by Volkswagen or the automotive supplier Continental.

Especially the car manufacturers – alongside VW, BMW and Daimler – as well as the chemical company BASF caused discussions with their planned profit distributions because these companies took advantage of short-time work and thus government benefits in the Corona crisis. To make matters worse for the automotive industry, creditworthiness is likely to decline this year due to the slump in sales. The rating agency Moody’s put VW, Daimler and BMW on the watch list with a negative sign.

Regulatory restrictions

This means that the groups are threatened with a rating downgrade, which tends to make financing on the bond market more expensive. Moody’s and Standard & Poor’s creditworthiness inspectors are reluctant to pay dividends to shareholders in such a crisis environment because liquidity is leaving the company. A sufficiently high liquidity buffer would be better for creditworthiness.

With regard to the dividend situation, Bissinger is currently aggravated by the fact that it is not clear when the companies that initially suspended their profit distribution would pay dividends again. This is also dependent on regulatory recommendations such as the banks or the repayment of state aid. For example, Lufthansa can only distribute profits once it has paid back its government aid.

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