THE COMING RECOVERY IN DIVIDENDS
Welcome to the 29th edition of the BKI Quarterly Report, prepared by Contact Asset Management (Contact).
2020 will be long remembered for many things. For those Australian investors reliant on dividends as an income stream, 2020 will be remembered as a dividend drought. In the face of a global pandemic and economic uncertainty, Australian corporates cut dividends as revenues stopped and JobKeeper was introduced – an understandable strategy. The upside is that emergency capital raisings were far lower than originally feared and significantly less than during the 2008/09 Global Financial Crisis – we explore this in greater detail below.
We believe that the lack of widespread, dilutive capital raisings is an important launchpad for a recovery in dividends. Investor sentiment has now turned – quite significantly. The economic recovery is underway, and we expect this to translate into a better 2021 for income focused investors.