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Power Outages Increase Political Scrutiny of Con Edison But Dividend Profile Remains Stable

Con Edison faces intense political pressure following Tropical Storm Isaias, which hit the East Coast on August 4. Isaias caused the second largest number of power outages in Con Edison's history; only Superstorm Sandy in 2012 caused more outages. Over 10% of Con Edison's customers lost power. Within that group, 25% of customers were still without power after three days, and 10% had no power after five days. Not only were New Yorkers upset by the lengthy outage, but many of them were confused by information displayed on the utility's outage map and received erroneous restoration messages. Frustrated by the widespread power outages, New York Governor Andrew Cuomo threatened the state's utilities at a recent press briefing: “Can a private company even [...]

August 28th, 2020|

Best Buy Sees Growth Accelerate With All Stores Reopened; Dividend Safety Score Upgraded to “Safe”

Best Buy's performance during the pandemic has exceeded our expectations, prompting us to upgrade the company's Dividend Safety Score from Borderline Safe to Safe. Best Buy reported earnings results on August 25, recording comparable sales growth of 5.8% despite its stores being open by appointment only for about half of the quarter. With all of its stores now fully reopened, sales increased 20% through the first three weeks of August. Best Buy's product mix and focus on digital (19% of sales last year) have driven its resilience during an otherwise very difficult time for most brick-and-mortar retailers.

August 26th, 2020|

Portland General Electric Expects to Maintain Dividend Despite Surprise Trading Loss

On August 24, Portland General Electric (PGE) disclosed that its energy trading activities in wholesale electricity markets will incur third quarter losses of up to $155 million. For context, the regulated utility over the last year generated total net income of about $240 million. Shares closed 8% lower on the news. As a result of this surprise loss, management lowered full-year 2020 EPS guidance by about 40% at the midpoint. Earnings are no longer expected to cover the dividend in the year ahead.

August 26th, 2020|

Target’s Dividend Safety Score Upgraded to “Very Safe” on Financial Strength, Store Performance

In 2017, Target's dividend yield approached 5% as investors worried about the long-term fate of big-box retailers in the age of Amazon. The company's same-store sales had started declining as more shopping migrated online, and Target's margins dipped as management invested in a digital-focused turnaround plan. Despite these bumps in the road, Target always maintained a Safe Dividend Safety Score, reflecting the company's reasonable payout ratio, consistent cash flow generation, and healthy balance sheet. Today we are upgrading Target's Dividend Safety Score to Very Safe as the firm has materially improved its key fundamental metrics and demonstrated further traction with its turnaround plan. Target reported earnings on August 19 and delivered the company's strongest ever comparable sales growth of 24%, fueled by the pandemic.

August 26th, 2020|
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