If there is one pattern that is holding true in the global pandemic era, it’s that one company after another is making some hard choices about paying. Pay employees? Pay vendors? And increasingly, the knife is hitting the once unthinkable: dividends.

In all, global dividends totaled almost $300 billion in the fourth quarter, and some of the world’s biggest-named firms are deciding to slash these payouts. But experts say that’s far from an easy call, because of what it means to both investors—including large institutions and millions of retirees—as well as a whole series of entities that rely on them. So far, more than 80 of the top 600 listed companies in Europe cut or scrapped dividends between Feb. 24 and April 8, a Reuters analysis found. In the US, there have been at least one dozen coronavirus-related dividend cuts at S&P 500 firms so far, and earlier this week a major investment bank put out a list of 60 S&P 500-listed firms who are "susceptible to a dividend cut."

Firms have no easy solution for where to make savings, says Benjamin Frost, Korn Ferry’s global manager for pay. “It is a question of who takes the hit,” he says. Still, major automakers, airlines, and retailers from across the globe have been cutting them, with the list seeming to grow every day. 

To be sure, public pressure is affecting some of this. In many countries, including the United Kingdom and the United States, public funds are being used to help keep companies afloat, save jobs, and reduce the economic fallout. The British government is covering up to 80% of workers’ pay for those furloughed by the coronavirus lockdown. With that aid comes some clear expectations that the money won’t get funneled off to the shareholders, says Frost. “Where government help is being sought, I can’t imagine there will be much tolerance for shareholders getting dividends,” he says.

Some companies may be deciding to cut the dividend to build up cash so they can be ready to ramp up production when the pandemic ends, says Christina Harrington, Korn Ferry’s head of advisory for Sweden. If the right reasons for the dividend cut are presented, the blow may go over easier. “It’s about explaining why they are cutting that is important,” Harrington says.

Still, not all investors are wealthy, says Johan Blomqvist, Korn Ferry’s general manager for Finland. “It’s not necessarily categorically bad to pay the dividend,” he says. Usually, when a company pays a dividend, then taxes get paid to the government. Lower or no dividends could make a dent in a country’s coffers, he explains. Likewise, retirees, many of whom are not rich, rely on regular dividend payments to make ends meet, so a cut hurts them directly.

The trickle-down effect includes charities as well, which run their operations from these cash payments too. “These organizations have missions that are very important for the societies that they work in,” says Blomqvist. Such institutions often back people in fine arts or classical music businesses, which often struggle without charitable support. “If they don’t get any dividend, that will have consequences for things that people find very valuable.”

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