The economic impact of the coronavirus pandemic could wipe up to 35% off global dividends in 2020 in a "worst case scenario" predicted by Janus Henderson Investors, an impact equivalent to around $500bn in payouts.
Janus Henderson's latest Global Dividend Index, published on Monday (18 May), declined to offer a 2020 forecast for overall dividends as "with so much uncertainty… [it] would have little value", but warned the impact of the pandemic for the rest of the year "will be significant" with dividend cuts already announced or likely impending wiping at least 15%, or $213bn, off this year's total pay outs.
The fund house's worst case includes all "vulnerable" corporates, taking into account factors like indebtedness, which would reduce total dividend payments to $933bn, down from around $1.4trn.
By comparison, global dividends fell by 30% amid the 2008 Global Financial Crisis.
Janus Henderson also warned the dividends crisis will "spread into 2021", which will see lower than expected dividends from a number of sectors resume if the global economy begins to recover.
Going forward, the firm said North American dividends are likely to be less affected than Europe and UK, while Asia will see a minor impact this year before seeing a bigger effect in 2021.
From a sector perspective, banks, discretionary consumer and "economically sensitive industrials" are set to be the most severely impacted, while dividends from technology, healthcare, food and most basic consumer sectors "should be safer", Janus Henderson said.
Tens of billions has already been wiped off global dividends since the crisis began, with usual dependable payers such as Shell and BT reducing theirs for the first time in multiple decades.
Despite this, Janus Henderson's latest Global Dividend Index found "almost no" impact as a result of the crisis on overall payments in the first quarter of 2020, with global pay outs rising by 3.6% on a headline basis to a first-quarter record of $275.4bn, equivalent to underlying growth of 4.3%.
The US and Canada each saw all-time quarterly records, while Japan, Hong Kong, and Russia all broke their respective records for the first quarter of the year.
Co-manager of Global Equity Income at Janus Henderson Ben Lofthouse said the downturn is "likely be very steep", but "unprecedented" efforts from governments and central banks give hope for a "swift recovery".
He added: "Dividend suspensions are inevitable due to the sudden, unprecedented halt in economic activity in many countries. For 2020, Q1 dividends have been paid so the full peak-to-trough impact is likely to be seen over the next twelve months or so.
"In many cases changes to dividend policies reflect the inability to predict when things return to ‘normal', but a new factor is the consideration of the relationship between government support and company behaviour.
"In some cases, dividend changes, along with executive pay moderation, are an acknowledgement or even requirement that shareholders should be part of society's Covid-19 response."