(Reuters) – U.S. investors will likely see sharp declines in capital returns this year as companies look to conserve cash during the coronavirus crisis, according to S&P Dow Jones Indices which is predicting a significant first-quarter decline in buybacks and a dismal second quarter.
FILE PHOTO: A trader uses a phone on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 20, 2020. REUTERS/Lucas Jackson
And while companies are more hesitant to cut or suspend dividends, some have already done so, potentially leading to S&P 500’s first annual drop in dividends since 2009, according to senior analyst Howard Silverblatt.
Along with the direct support when buybacks are made, they also swell earnings per share as they result in lower share counts. But since they are easier to suspend than dividends, buybacks are the first place companies reduce capital returns.
Silverblatt, at S&P Dow Jones Indices, says buybacks may be depressed for the full year as “companies are going to be concerned about their liquidity” for a while even when things start looking up.
“When we believe the virus has hit the bottom then you start the long way up for the