Dividend cuts are becoming a more frequent concern for investors as the coronavirus crisis spreads.
FTSE 100 stalwart ITV has become the latest blue chip to hack back shareholder rewards. It backpeddled on plans to pay a final dividend for 2019 and to pay an 8p per share reward in 2020, too.
The broadcaster said that it might consider paying an interim dividend depending on circumstances later in the year. However, such an event appears most unlikely at this stage.
Prime Minister Johnson’s assertion last week that Covid-19 will be defeated in 12 weeks – a timeframe that would take us well into the summer – has been dismissed by many health experts.
ITV has recently endured a stream of advertising deferrals, which could clearly continue to be a problem for a long time.
Safe as houses
In times like this it can pay to park your cash in non-cyclical shares with much more stable earnings. It may even pay to invest in companies whose products or services thrive in times of crisis like this.
Polymetal International (LSE: POLY) is one Footsie-quoted share I’d happily put my money in today. This gold miner is in great shape to ride a strong gold price in the weeks and month ahead. While many other blue chips are cutting dividends like crazy, this is one stock I think could make good on broker forecasts for big dividends in 2020.
The yellow metal’s price movements remain curious. Gold’s caught in a conflict between heavy, margin-call-related selling and strong flight-to-safety buying. For the moment it’s holding around the $1,500 per ounce marker. Just just a fortnight ago, however, it nosedived from seven-year highs above $1,700.
I expect it to rise again amid increasing global panic concerning Covid-19 and its economic impact.
Data from The Pure Gold Company illustrates just how strong bullion demand is today. Apparently, gold bar and coin sales have leapt by an eye-popping 980% over the past seven days, compared to the past year’s weekly average.
The retailer says that “demand is being driven by acute fear and uncertainty about the trajectory of the virus and the economic damage most people expect will continue (for years to come) after the virus disappears.” Sales are gaining traction and I believe prices will hit new major milestones before very long.
No wonder then that City analysts expect earnings at Polymetal to bounce up 29% in 2020. This leads to expectations that dividends will also grow again, resulting in a bulky 7% yield. The digger’s meaty dividend coverage of 1.8 times suggests it is in great shape to meet current expectations.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.