Retail investors have been one of the victims of the pandemic as listed companies cut back on their dividend payments to conserve cash in the wake of the Covid-19 crisis.
Dhaka Tribune analysed data of cash dividend payouts of the listed companies whose financial year runs from July to June of 2018-19 and 2019-20 to gauge the impact of the pandemic.
In Bangladesh, the first confirmed cases of COVID-19 were announced on March 8 and three weeks later the government had put the country on a two-and-a-half-month-long shutdown to flatten the curve on coronavirus, slamming shut the majority of the economic activities.
For the 2018-19 financial year, 45 companies had announced cash dividend upwards of 10 per cent, putting them in the ‘A’ category of shares.
Last year, 19 of the 45 companies announced lesser dividends for their shareholders. Six are yet to announce their dividends, while 10 announced the same amount of dividend in their 2019-20 financial year as in the previous year.
Seven announced higher dividends than a year earlier.
Companies that cut dividend payments include ACI, ACI Formulations, Square Textiles, Summit Power, ACME Laboratories, Orion Pharma, Apex Footwear.
Northern Jute, Envoy Textiles and National Tea Company would be downgraded to the ‘B’ category of shares because of their lower dividend payout for their last financial year.
The ‘B’ category stocks are those that hand out dividend of less than 10 per cent in their last financial year.
Meanwhile, the number of companies not paying any form of a dividend to their shareholders for the 2019-20 financial year increased by 38.5 per cent from the previous year as the global coronavirus pandemic bit hard on their balance sheets.
As of Sunday, 36 companies were found to have suspended dividend for the financial year that ended on June 30, but the number could very well be higher as 29 companies are yet to unveil their full-year earnings yet.
Of the companies that have not announced any cash or dividend, 19 did not announce any dividend in the previous year as well, meaning they were already trading as junk stocks.
But this year, 17 companies joined them as they looked to conserve cash and strengthen their balance sheet amid the pandemic.
Their failure to give their shareholders a payout this year means they are heading to the ‘Z’ category now, as per securities rules.
It will be quite the comedown for Golden Harvest Agro Industries, Saiham Textile, Saiham Cotton, AFC Agro, Gemini Sea Food, Malek Spinning and Samorita Hospital -- all ‘A’ category shares.
A-category shares mean the companies have declared a dividend of 10 per cent or more in the previous year.
Companies across the world too were forced to cut or suspend their dividend payments to conserve cash in the wake of the COVID-19 crisis: globally, dividends fell by over a fifth to $383.2 billion the second quarter of 2020.
Many companies were reeling from the impact of the coronavirus, so they could not reward their shareholders with handsome dividends, said Md Shakil Rizvi, a director and former president of the Dhaka Stock Exchange.
“Besides, many are not paying that many dividends thinking about the future of the business. On the other hand, many companies could not pay dividends due to the incompetence of their directors,” he added.
Most of the listed companies are suffering from lack of good governance, said Abu Ahmed, an honorary professor at the Dhaka University’s economics department and a stock market analyst.
