Looking back to March 2020, there was a spate of companies suspending their dividends due to the Covid-19 pandemic. With many companies suffering significant losses, they were left with no choice but to halt distributions to shareholders until further notice.
What happened: According to the Wall Street Journal, around 190 U.S. public companies suspended dividends in 2020, after 39 reintroduced dividends that same year, 53 reintroduced them in 2021, and 23 more companies plan to reintroduce dividends in 2022 .
Although paying dividends is an important consideration for many companies and investors, many companies face challenges in maintaining dividend payments as economic conditions remain uncertain. Companies can still attract investors by reducing debt, buying back stock, and reinvesting their profits into the company for continued growth. Here are two companies that have suspended dividend payments but may be able to bring them back depending on various factors.
The Walt Disney Company DIS last paid a dividend of $1.76 per share per year in 2019. activist investor Dan Loeb wrote a letter to Disney in 2020 to suspend its $3 billion dividend payments to invest more capital in Disney+ content, according to CNBC.
Disney is focused on reducing debt from its balance sheet as it has total debt of about $101 billion as of 2021, up 11% from 2019. For the nine months ended July 2, 2022, Disney recorded negative free cash flow of $317 million compared to positive free cash flow of $466 million for the nine months of the prior year.
Additionally, Disney reported net income of $1.4 billion in the third quarter of 2022, up 54% from the year-ago quarter.
Before dividends are reinstated, Disney is focused on reducing its debt and using its earnings to bolster its streaming services for continued growth.
Senior Index Analyst at S&P Dow Jones Indices, Howard Silberblatt said: “The companies that haven’t come back yet are the ones that aren’t sure of their future yet,” per…
