Shareholder returns will fall 40% this year, Goldman says. Here are some safe dividend plays Published: April 30, 2020 at 7:28 a.m. ET

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It’s hard out there for anyone depending on investments for income.

Even as bond yields TMUBMUSD10Y, 0.581% have fallen to all-time lows, companies are reducing dividends. So far this year, at least 30 S&P 500 index SPX, -1.42% companies have announced plans to lower their dividends or cut them altogether, according to an analysis from Goldman Sachs.

Goldman’s research shows investors should expect overall dividends to fall 23% in 2020, but also offers some suggestions on companies that have strong balance sheets and are likely to preserve their dividends.


The table below shows the top company in each S&P 500 sector that meets Goldman’s criteria of “high dividend yields, healthy balance sheets, and reasonable payout ratios.”

Communications Services
Omnicom Group Inc. OMC, -5.31% 5% 50
Consumer Discretionary
Home Depot Inc. HD, -0.99% 2.8% 128
Consumer Staples
Archer-Daniels-Midland Co. ADM, -3.30% 4% 23
Wells Fargo & Co. WFC, -3.25% 7.6% 39
Health Care
Merck & Co. Inc. MRK, -1.30% 3% 156
Raytheon Technologies Corp. RTX, -4.09% 4.6% 15
Information Technology
International Business Machines Corp. IBM, -2.19% 5.2% 102
Nucor Corp. NUE, -2.32% 4.3% 41
Real Estate
Regency Centers REG, -0.94% 6.7% 39
CenterPoint Energy Inc. CNP, -4.57% 7.0% 55
Source: Goldman Sachs analysis

It’s not just dividends that will suffer in the cash-strapped downturn. Goldman forecasts a 50% decline in share buybacks. Between those two categories, overall return to shareholders will fall 40% from last year.

The forecast also calls for a 9% decline in research and development, and for a 27% reduction in capital expenditures, a reminder that businesses are prioritizing survival over growth and innovation.

Editor’s note: CenterPoint Energy Inc. announced a dividend cut April 1.

Originally Published on MarketWatch

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