Roughly a quarter of U.S.-listed companies that stopped paying a dividend in 2020 have yet to revive them in the face of inflation and higher interest rates, The Wall Street Journal reported.  

These companies, Boeing and Carnival among them, have chosen to reduce leverage, addressing production problems and making capital investments.

In 2020, 187 U.S.-listed companies suspended or canceled their dividends to preserve cash, as the COVID-19 pandemic put pressure on their balance sheets, according to S&P Global Market Intelligence, a data provider. Thirty-nine restored their dividend that year, 53 did so in 2021, and 31 did so in 2022, nine in 2023, and one so far this year.That pace has since slowed, with nine companies, including Disney, Delta Air Lines and Hyatt Hotels, reviving the investor payouts in 2023 and so far one, commercial printer Quad/Graphics, this year. With seven companies delisting in recent years, 47 have still not revived their dividends.

The pandemic begat a number of challenges, such as store closures, reduced travel demand and cruise-line shutdowns. The ensuing years saw supply-chain bottlenecks, and spikes in inflation and higher interest rates, Those factors increased the cost of capital, hampering the progress toward complete financial strength.

Some of the companies that resumed dividends are stepping up their dividend payouts despite higher interest expenses, the Journal reported. S&P 500 companies are expected to collectively pay a dividend of $75.09 a share this year, up by 6.8 percent from $70.30 in 2023, which was up by 5 percent from 2022, according to S&P Dow Jones Indices.

Companies that choose to pay dividends to shareholders do so quarterly, meaning that executives must have visibility into future cash flows and allocate sufficient capital to cover payments. Cutting or canceling a dividend is often a sign that worries investors and may hurt a company’s stock price.

Companies often pay dividends in order to communicate their confidence in their businesses' future, and also at times to eliminate excess cash, the Journal added.

Carnival, the Miami-based cruise operator, wants to bring back its dividend, but not until it achieves certain metrics that would return it to an investment-grade credit rating through an upgrade by the credit-rating firms, CFO David Bernstein told the Journal.

“Our business is back, and we’re expecting to see continued improvements next year and the year beyond,” he said. “It is important to rebuild our financial fortress before we start paying dividends.”  

Boeing is focused on stabilizing its finances in the wake of heightened regulatory scrutiny and production issues. So dividend payments is not a top priority. “In terms of what a return to capital discussion might look like, too early,” CFO Brian West said at a conference last year in response to an analyst’s question about timing for resuming a dividend payment, the Journal reported. “But it’ll be there someday. It will be there someday.” 

Companies that haven’t restored their dividends are primarily concerned about the drain on cash that dividends would represent if an economic downturn hits, said Greg Milano, chief executive at Fortuna Advisors, which advises companies on allocating capital, in an interview. “The pandemic created an opportunity when you could stop paying dividends without being sort of slapped in the face,” he said.

Many investors like dividend-paying stocks because of the income they provide. 

“I want to invest in companies that are either paying dividends or they’re reinvesting in themselves because they think reinvesting will pay more than giving money out,” said James McRitchie, an individual investor in close to 300 companies, including Boeing, in an interview with the Journal.