Dividend policy in a crisis: a pre and post-COVID-19 comparison of DJIA and DAX companies

This study examines the shifts in dividend policy drivers for companies listed on the Dow Jones Industrial Average (DJIA) and Deutscher Aktienindex (DAX) by comparing the pre-COVID-19 (2015–2019) and post-COVID-19 (2020– 2024) periods. Employing a two-stage methodology, we first use factor analysis to distill traditional and cash flow-based profitability indicators into key factors, followed by panel regression models to assess their impact on dividend payouts. Findings indicate that the 2020 crisis significantly altered dividend strategies. For DJIA firms, dividend policy shifted from asset-based profitability (pre-2020) to a strong reliance on equity-based profitability (ROE, CFROE) post-2020, reflecting investor preference for immediate returns during uncertainty. For DAX firms, cash flow-based profitability emerged as the primary driver post-2020, unlike the pre-crisis period where no profitability factor was significant, highlighting distinct market responses to economic shocks in the U.S. and Germany.