What's going on?

Take a long look at your dividends, income investors, because they could be your last for a while: Goldman Sachs reckons coronavirus support for large companies has put cash payouts at risk.

What does this mean?

In its analysis of major European companies� dividends, Goldman concluded that since this year�s payouts are mostly paid using last year�s profits, they wouldn�t normally be at risk. But given the significant regulatory hurdles for companies that take government aid, as many as a fifth of the eurozone�s largest companies have paused their payouts. Between those companies and this year�s fast-falling profit predictions, there are questions over next year�s dividends too (even if, by Goldman�s reckoning, that�s already being reflected in stock prices). Things might only start getting interesting again in 2022, when 2021�s profits are paid out as dividends. Goldman, for one, thinks there could be an even bigger jump in payouts than investors are currently predicting.

Why should I care?

For markets: Looking after the pennies.

The companies that have canceled their dividends in Europe are primarily banks, travel and leisure brands, and industrial firms. And it�s not so different across the Atlantic: American investment bank JPMorgan said on Monday it�d consider suspending its dividend for the first time ever if the forthcoming recession is as bad as analysts forecast. That might explain why some of Goldman�s sector recommendations are focused on industries that tend to be resilient in a downturn, including tech, telecoms, and consumer staples stocks.

The bigger picture: Dividends make the world go round.

Dividends matter to investors of all types: some rely on regular payouts to fund their living costs, while others � like insurance companies � use them to help cover the costs of claims. Insurers invest the premiums they collect from policies, so they�re likely facing a double whammy: lost income from dividends and potentially big claims from coronavirus-hit customers.