Which FTSE 100 firms could see a cut in dividend payouts due to the market crash?

first_img Jonathan Smith | Monday, 30th March, 2020 Our 6 ‘Best Buys Now’ Shares Jonathan Smith does not own shares in any firm mentioned. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Enter Your Email Address I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Image source: Getty Images The impact of the Covid-19 pandemic is still ongoing and still affecting the FTSE 100 stock market. On top of the move lower in the FTSE 100 index, individual firms within it are also impacted. Sectors such as aviation, travel, and retail are just a few that are struggling.Here at The Motley Fool, we believe in investing for the long term, and so see some good opportunities to buy given the cheap valuations on offer. A side impact of cheaper valuations is that it artificially boosts the dividend yield of a company.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…As an example, let us say you bought a stock at 100p and it paid a dividend of 10p. Your dividend yield would be 10%. But if the share price dropped to 80p, the dividend yield increases to 12.5%. This is good news for new investors, as they can effectively lock in the higher dividend yield by buying the share at a cheaper price.The risk of this is that dividends are not guaranteed with ordinary shares. A company can decide to decrease or even cut a dividend all together for a year, depending on financial performance. While the board of directors aims to keep paying a dividend in order to keep shareholders happy and invested during bad times, it does not always happen.Which FTSE 100 firms have announced a cut?One of the biggest announcements of a dividend cut came last Monday, when ITV said it would not pay £213.6m in dividends. This is part of a £300m cost-cutting exercise, needed to offset a fall in advertising revenue.UK housebuilder Persimmon also announced that it was cancelling its next two dividend payments. Like ITV, the housebuilder is seeking to cut costs, due to a dry up in demand for new houses. Even finished projects will likely see stagnant demand until uncertainty has passed.How can I be sure of receiving a dividend?There are two ways that income investors can aim to still pick up dividends by investing in FTSE 100 firms. Firstly, look at the size of the share price fall and the updated dividend yield.For example, the ITV share price is down over 55% in the past three months. Using the previous year’s dividend of 8p per share, and a share price of 67p, this would be a dividend yield of 12%. This looks unsustainable in light of the firm’s historical dividend yield. Hence, we have seen it cut. There are plenty of other shares now yielding 10% or even 20% yields which start to raise alarm bells for me.Secondly, look at the firm’s dividend cover. This measures the profit of a firm versus how much is paid out as a dividend. A cover of 1 means the dividend can be paid entirely from profit. To feel safer about continuing to receive a dividend, I would be buying firms with a cover of at least 1.5.In my opinion, seeking reliable dividend income at the moment is tough. That is why I am focusing more on buying stocks for capital appreciation. I’m looking for stocks that are fundamentally undervalued in the long run. Simply click below to discover how you can take advantage of this.center_img Which FTSE 100 firms could see a cut in dividend payouts due to the market crash? I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! See all posts by Jonathan Smith Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. 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