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It’s hard out there for anyone depending on investments for income.
Even as bond yields TMUBMUSD10Y, 0.609% have fallen to all-time lows, companies are reducing dividends. So far this year, at least 30 S&P 500 index SPX, +2.65% companies have announced plans to lower their dividends or cut them altogether, according to an analysis from Goldman Sachs.
Goldman’s research shows investors should expect overall dividends to fall 23% in 2020, but also offers some suggestions on companies that have strong balance sheets and are likely to preserve their dividends.
Related:These funds were made to protect against market downsides. So how’d they do in March?
The table below shows the top company in each S&P 500 sector that meets Goldman’s criteria of “high dividend yields, healthy balance sheets, and reasonable payout ratios.”
| Company, by sector | Annual dividend yield | Consecutive quarters without dividend reduction |
| Communications Services | ||
| Omnicom Group Inc. OMC, +8.60% | 5% | 50 |
| Consumer Discretionary | ||
| Home Depot Inc. HD, +1.92% | 2.8% | 128 |
| Consumer Staples | ||
| Archer-Daniels-Midland Co. ADM, +3.33% | 4% | 23 |
| Financials | ||
| Wells Fargo & Co. WFC, +3.91% | 7.6% | 39 |
| Health Care | ||
| Merck & Co. Inc. MRK, -0.50% | 3% | 156 |
| Industrials | ||
| Raytheon Technologies Corp. RTX, +3.83% | 4.6% | 15 |
| Information Technology | ||
| International Business Machines Corp. IBM, +1.91% | 5.2% | 102 |
| Materials | ||
| Nucor Corp. NUE, +4.96% | 4.3% | 41 |
| Real Estate | ||
| Regency Centers REG, +9.57% | 6.7% | 39 |
| Utilities | ||
| CenterPoint Energy Inc. CNP, +1.60% | 7.0% | 55 |
| Source: Goldman Sachs analysis | ||
It’s not just dividends that will suffer in the cash-strapped downturn. Goldman forecasts a 50% decline in share buybacks. Between those two categories, overall return to shareholders will fall 40% from last year.
The forecast also calls for a 9% decline in research and development, and for a 27% reduction in capital expenditures, a reminder that businesses are prioritizing survival over growth and innovation.
See:Will U.S. stocks lurch lower from here? Look to past ‘waterfalls’ for context
