Fifth of global companies twice as likely to cut dividends in 2020

Dividend growth far outweighed profit growth in 2019

Companies that offer high but unsustainable dividends - which the team at Henderson International Income Trust (HINT) suspects account for 20% of all investable firms globally - are now twice as likely to slash their dividends as profits are expected to tumble by more than a fifth by the end of the year due to the coronavirus pandemic.

In HINT's Global Dividend Cover Report released last week, the team found that dividends jumped by 8.7% in 2019 to a record £1trn, outstripping global profit growth, which inched ahead by 1.1% to £2.2trn. Why airlines are 'attractive value opportunities' As such, the team warned that dividend cover has continued to fall - a trend that has been seen each year since the average dividend cover reached its post-Global Financial Crisis high of 2.9x in 2010 - and that this will only accelerate given the Covid-19 crisis. Ben Lofthouse, manager of HINT, said that normally in a recession, c...