In the first half of 2020, many companies have cut back on
their dividend payments, slashing or suspending them to conserve cash against
the downturn. That trend appeared to reverse itself – or at least, to start to
reverse itself – in August, when 13 companies announced dividend increases
while only 2 announced cuts. Is this a signal that Q3 will show rebounding
sentiment toward dividend and buyback policies? The recessionary pressure is
easing; and dividends are a powerful attractor for cautious investors.
Looking at the current situation from Evercore ISI, market
strategist Dennis DeBusschere believes the worse is over, saying, “[A] sharp
drop in cash returns is unlikely [in 2h20.]” He believes that companies will
continue, albeit slowly, to restore both dividends and buyback policies – but
cautions that investors should not expect a return to pre-pandemic levels for
until at least 2022.
“Though a recovery back to pre-pandemic levels is not likely
for at least two years, the negative impact on high cash return names and
income strategies should continue to stabilize through year end,” DeBusschere
opined.
Following DeBusschere’s lead, Evercore’s stock analysts have
been tagging high-yield dividend payers as likely prospects for investors
looking to buy in. According to the TipRanks data, these are Buy-rated stocks,
with at least a 7% dividend yield and upwards of 10% upside for the year ahead.
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