Outlook for dividend payments is not as gloomy as it was

Although dividend payments have fallen during coronavirus, that does not mean that the outlook for stock markets is poor. On the contrary, a decline in dividends has often been followed by a surge in equity prices as economies have recovered. This is what we saw after the Global Financial Crisis (GFC) and have also seen since 23rd March this year. In any case, investors are no longer bracing for such a big plunge in dividends as they were five months ago. Expectations for future dividend payments have recovered significantly since then, even if they remain well below their trailing level on 19th February.