Due to the coronavirus crisis, tens of thousands of shareholders in European companies will get significantly lower dividends this year, or even remain empty-handed. According to an analysis by DZ Bank, almost one quarter, exactly 141 of the 600 companies in the European Stoxx Index, announced that the distribution of dividends would be reduced or suspended.

“An unprecedented wave of dividend cuts is being observed across stock markets”, says the analysis. Expected distribution in Stoxx for the fiscal year 2019 will shrink by 23% to about 310 billion EUR, predicts the DZ Bank expert Michael Bissinger. “We expect allocations to drop further in the coming months”, added he.

A 40% cut in dividends seems realistic. This would be comparable to the blow to shareholders in Europe during the 2008/2009 financial crisis. “We expect this time that dividends will fall by at least as much as during the financial crisis”, wrote Michael Bissinger in his analysis.

Disproportionately more often dividends reduce banks, industrial companies, tourism industry firms, and the retail sector. Almost two-thirds of European banks in Stoxx have so far canceled profit sharing.

The pressure from supervisors here was great: they asked financial institutions to withhold their money because of the economic downturn. According to the analysis, the expected volume of distribution of dividends in the healthcare, chemicals, and telecommunications sectors is relatively constant.

“Reducing or canceling a dividend always leads to a great loss of confidence”, writes Michael Bissinger.

And the outlook is also bleak: as of mid-February, dividend estimates for the current fiscal 2020 have been reduced by 14%. “We find this reduction too low”, said the bank’s study.

In mid-April, Merck Finck’s chief strategist Robert Greil announced that he thought companies in the leading German Dax index would distribute about one-tenth less dividends than in the previous year. Robert Greil’s conclusion: “The dividends of European corporations have been on record after a record in recent years. For many investors, dividends in times of low interest rates were a welcome source of income. But this year there will be a poor awakening for some dividend hunters”.

In view of the end of the dividend boom after five record years in a row, Marc Tungler, CEO of the German Association of Shareholders (DSW), appeals: “business model or high liquidity, they have to go through a pandemic while sticking to their dividend proposals”.