Whenever I do my homework on dividends (which is pretty considerable as I have the Switzer Dividend Growth (SWTZ) fund), I never pressure test the possible yield during an extreme occurrence such as a pandemic and economic lock down.
To misuse the great line from the Robert Frost poem The Road Not Taken: “We took the road less travelled by and that has made all the difference!”, because of the pandemic, we’ve gone down an economic road that’s never been trod before in our lifetime. And this has led to a very different outcome for dividends, even compared to the GFC.
The difference hasn’t been positive for the very good businesses many of us invest in. We never expected these businesses would face closures for about 12 weeks and then another quarter after that, where listed companies will have to cope with stressed business and consumers trying to embrace normalcy again.