NEW YORK (Reuters) – Companies across a range of industries are slashing or suspending dividends to cope with the economic fallout from the coronavirus outbreak, complicating the stock selection process for money managers eager to buttress their portfolios with a steady stream of income.
FILE PHOTO: A street sign for Wall Street is seen outside the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S. December 28, 2016. REUTERS/Andrew Kelly
The past week’s plunge in oil prices has potentially accelerated that process, raising concerns about the rock-steady dividends of companies such as Exxon Mobil and Chevron Corp, which are set to report results on Friday, May 1.
The S&P 500 dividend aristocrats index, which tracks companies that have increased dividends annually for the past 25 years and includes Exxon and Chevron, has fallen about 19% so far in 2020 as of Thursday, greater than the 12.9% drop over that time for the S&P 500 total return index.
That’s bad news for yield-thirsty investors at a time when payouts on U.S Treasuries stand near historic lows as the Federal Reserve keeps interest rates in check to stimulate the economy.