Amid the ongoing uncertainty of the Covid-19 pandemic, corporations are prioritising cash on their balance sheets.
But even with a vaccine in sight, investors will need to be cautious - against a backdrop of an uneven recovery in demand, companies are unlikely to resume at pre-Covid levels. Excess capacity will allow for postponements in capital expenditure CAPEX spending in order to preserve more cash.
As companies display greater frugality towards investing, incentives exist to remain generous with dividends.
This issue is politically contentious - it is not lost on taxpayers that in some sectors, public bailouts were equal to buybacks and dividends paid...