Disney (NYSE:DIS) and Macy's (NYSE:M) are experiencing declining revenue due to the coronavirus pandemic. They each rely largely on enticing groups of people to spend time and money in person. To conserve cash and increase the probability that they'll survive the pandemic's consequences, they both suspended their dividends earlier in 2020. 

There is light at the end of the tunnel. Positive news related to several coronavirus vaccine trials is increasing hope that there will be a return to normalcy sometime in 2021. Still, coronavirus cases are surging in many parts of the world, putting a pause on the progress of slowly restarting operations. With uncertainty still looming large, let's dig a little deeper and try to answer which of these dividend stocks will be the first to reinstate its dividend. 

A hundred dollar bill with Benjamin Franklin wearing a mask.

Macy's and Disney suspended their dividends. Image source: Getty Images.

Macy's is cash-strapped 

When Macy's last reported quarterly results on Nov. 12, comparable store sales were down 21% from the prior year. Its online sales helped offset the major declines from in-person shopping, but it wasn't enough to keep the company from experiencing revenue declines.

Importantly, Macy's generated $244 million in cash from operating activities in the most recent quarter, which was actually higher than the same period a year ago. The main reason is that the company substantially decreased the amount of money it spent on inventory.

Even as it tightened its belt, the figure is lower than what the company paid out in dividends in the same quarter last year ($349 million). And increasing cash from operations by essentially removing a significant chunk of inventory purchases is not sustainable.

Still, the company has over $1.5 billion in cash on hand and over $7 billion in current assets to ensure it will make it to the other side of the pandemic largely intact. However, with $6.6 billion in current liabilities, the inevitable cash generated from holiday sales is mostly accounted for.  

Even if there is a return to normalcy in the summer of 2021, the company may decide to wait to reinstate the dividend because of the need to ramp up inventories for the 2021 holiday season. If all goes well for Macy's, it may decide to start paying a dividend again after the holiday quarter of 2021. 

A fireworks display

Disney theme parks are operating at a reduced capacity. Image source: Getty Images.

Disney needs to get those turnstiles turning  

Since the start of the pandemic, Disney's main bottleneck to producing cash is the attendance restrictions at its theme parks. Initially, they were all asked to close, and recently some have reopened at reduced capacity. Sill, the surge in coronavirus cases in regions where it operates a park is putting even reduced capacity operations at risk. 

Moreover, Disney is in the middle of investing in expanding its streaming services (Disney+, Hulu, and ESPN+). And even though the rollout has been extremely successful, the segment is still not profitable. Its saving grace has been its media networks segment, which in fiscal 2020 brought over 100% of operating profits for the company.

Disney is not facing any liquidity problems in the near term, with close to $18 billion in cash and over $35 billion in current assets, and just under $27 billion in current liabilities. Moreover, Disney generated more cash from operating activities in 2020 ($7.6 billion) than it paid in dividends for all of 2019 ($2.9 billion).

With that being said, Disney may take the prudent route and not reinstate its dividend until it has a green light from local governments to reopen all of its theme parks with limited restrictions. And that may only happen when a large proportion of the population has been inoculated with a coronavirus vaccine.  

Overall, both companies are relying on the pandemic to fade away before they can return to full strength. However, Disney appears closer to reinstating its dividend after considering its balance sheet and ability to generate cash from its media segment. Investors interested in buying Macy's or Disney stock because of the dividend will have to wait a little while longer. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.