The Intelligence from The Economist Held in cheque: corporate payouts and covid-19
Apr 22, 2020
Stanley Pignol, The Economist's European business and finance correspondent, delves into the contentious issue of corporate payouts during the COVID-19 pandemic. He discusses the conflict between shareholder dividends and the need for companies to seek government aid. With a looming recession, he raises questions about corporate accountability. The conversation also touches on the alarming state of the Great Barrier Reef, highlighting the impact of rising sea temperatures and the unexpected wildlife resurgence during lockdowns.
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Corporate Payouts Under Scrutiny
- Companies return profits to shareholders through dividends and share buybacks.
- These payouts are now being criticized, especially during the current crisis.
The Importance of Dividends
- Dividends are essential for recycling cash from mature companies to younger, growing ones.
- Challenging dividends broadly is misguided; they play a vital role in capital allocation.
Dividend Decline
- Global dividends are projected to fall significantly this year, even more sharply than during the 2008 financial crisis.
- This drop is due to decreased profits and companies' uncertainty about the future.