Via Bloomberg
There were warnings that dividends would have to go in Australia and the decision by Westpac to halt its dividend for the first time in 40 years underscores those warnings. Over the last years Australia's S&P/ASX 200 index has consistently offered one of the greatest dividend yields in Asia and beyond.
According to Refinitiv data Westpac paid an interim dividend of 94 cents last year and paid one every 6 months for the past three decades. So yesterday the board met for their Q3 meeting and decided not to pay the first half dividend for 2020. The reason was that the bank wanted to maintain a strong balance sheet amidst the ongoing uncertainty in the operating environment. The next time the dividend will be considered will be as part of finalising the full year 2020 results. You can read Westpac's 3Q2020 update here.
The outlook from analysts had been that Australia shareholder payouts could fall as much as 40% in 2020 and continue to fall in 2021 as the continued drag from COVID-19 via lockdowns and restrictions weigh on corporate earnings. This could also weigh on household earnings due to the large proportion of domestic equities in retirement and investment portfolios. Keep an eye on the ASX and the 6200 level for the near term battle between bulls and bears.
