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Companies Suspend Dividends, Buybacks As Pandemic Weakens Market

Shanthi Rexaline

Dividend and buybacks are the primary means adopted by companies to reward their shareholders. Shareholders can also find returns from capital gains or stock price appreciation, which may or may not be in the company's control.

As desperate times call for desperate measures, a slew of companies have announced suspensions of dividend, buybacks or both as the coronavirus pandemic wallops the market. 

Why Companies Hit The Pause Button

These moves stem from the need to conserve cash as companies navigate through a turbulent phase that's likely to hit their top- and bottom-lines.

There's a political reason to exercise prudence too, with Congress on the cusp of passing a -trillion stimulus package. Lawmakers have expressed their opposition to companies squandering away aid money with buybacks.

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The following companies have announced suspension shareholder reward programs in the wake of the pandemic. 

Intel Corporation (NASDAQ: INTC) revealed in a 8-K filing Tuesday it is suspending its stock repurchases due to the pandemic. The company termed the decision as prudent, given the length and uncertainty of the pandemic. Dividends, won't be affected, Intel said.

The suspension stalls a $20-billion buyback the company announced in October 2019.

Ford Motor Company (NYSE: F) announced March 19 it's suspending its dividend to preserve cash and provide additional flexibility. The automaker also withdrew its guidance.

Boeing Co (NYSE: BA), which is beset by both fundamental and geopolitical woes, announced the suspension of its dividend program. The company also said it will extend the pause in its share repurchases. 

Big banks JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corp (NYSE: BAC), Citigroup Inc (NYSE: C), Goldman Sachs Group Inc (NYSE: GS), Morgan Stanley (NYSE: MS), Wells Fargo & Co (NYSE: WFC), Bank of New York Mellon Corp (NYSE: BK) and State Street Corp (NYSE: STT) have all suspended their buybacks until the second quarter in order to lend money to individuals and businesses.

Oil giants Royal Dutch Shell plc ADR Class A (NYSE: RDS-A) and Total SA (NYSE: TOT), which are confronted with a steep decline in oil prices, have also announced a stalling of buybacks, while most other oil majors have hinted at slashing their capital expenditures. 

Mcdonald's Corp's (NYSE: MCD) CEO Chris Kempczinsk said in an interview with CNBC the company suspended its $15-billion buyback several weeks ago.

Department stores Macy's Inc (NYSE: M) and Nordstrom, Inc. (NYSE: JWN) suspended their respective dividends, while Nordstrom also halted buybacks. Peer Kohl's Corporation (NYSE: KSS) withdrew its buyback program while suggesting it is evaluating its dividend.

Miner Freeport-McMoRan Inc (NYSE: FCX) announced the suspension of its dividend.

Marriott International Inc (NASDAQ: MAR) said it is halting dividend payments after the payout of a previously announced first-quarter dividend March 31.

Telecom giant AT&T Inc. (NYSE: T) announced the suspension of its buyback program in a bid to protect its dividend.

Among airlines, Delta Air Lines, Inc. (NYSE: DAL) announced March 10 the suspension of buybacks and the deferring of $500 million in capex. Subsequently, on March 20, the company announced temporary halting of future dividend payments. Alaska Air Group, Inc. (NASDAQ: ALK) also said it is suspending its dividend program while also slashing 70% of its capacity.

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