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AT&T Continues Generating Solid Cash Flow Despite the Pandemic and Remains Committed to the Dividend

AT&T reported earnings on July 23, providing a more complete look at how its expansive business is performing during this economic downturn. For the most part, there were no big surprises. Revenue declined by about 9% and EBITDA dipped 6%, driven by a steep pandemic-related slump at WarnerMedia. Content production and theaters were shut down, and the [...]

July 31st, 2020|Uncategorized|

Philip Morris Expects Free Cash Flow to Continue Covering Dividend as Reduced-Risk Products Grow

Philip Morris reported earnings on July 21 and made clear that it remains committed to its dividend despite uncertainties created by the pandemic:  "Our balance sheet and financial position are strong, and our commitment to the dividend remains unwavering."– CFO Emmanuel Babeau As expected, lockdown measures and reduced social gatherings reduced demand for combustible cigarettes, which experienced [...]

July 22nd, 2020|Uncategorized|

Coca-Cola Sees Improving Volume Trends and Remains Committed to Dividend Growth

Coca-Cola reported earnings on July 21, closing the books on "what has arguably been the toughest and most complex quarter in Coca-Cola history," according to Chairman and CEO James Quincy. As expected, organic sales fell 26% due to pandemic-related challenges in away-from-home markets, which account for about half of Coca-Cola's revenue and include restaurants, bars, cinemas, and [...]

July 22nd, 2020|Uncategorized|

Chevron’s “Safe” Dividend Safety Score Reaffirmed Following Acquisition of Noble Energy

On July 20, Chevron agreed to acquire independent oil and gas producer Noble Energy for $5 billion in an all-stock deal. Chevron will also assume Noble's debt of about $8 billion. We don't expect this deal to materially affect Chevron's dividend profile and are maintaining the firm's Safe Dividend Safety Score. The downturn in energy markets seemed likely to [...]

July 21st, 2020|Uncategorized|

STORE’s Rent Collection Improves to 85% in July Despite Rise in COVID Case Levels

On Monday, STORE reported that as of July 17 it had received 85% of rent due this month. That's up from 71% in April, 68% in May, and 78% in June. The improved collection rate was driven by higher rent collected from tenants in the restaurant (14% of rent), education (7%), and furniture (6%) sectors. About 40% [...]

July 21st, 2020|Uncategorized|

Walgreens’ Dividend Remains Safe But Pandemic Increases Growth Challenges

Walgreens Boots Alliance reported earnings on July 9, providing a closer look at the pandemic's impact on its business. From March through May, Walgreens' sales actually increased slightly but the firm's adjusted EPS fell 43%. In its core Retail Pharmacy USA segment (about 75% of profits last year), same-store sales grew 3% as consumers continued snapping up [...]

July 14th, 2020|Uncategorized|

Rising Leverage Puts More Pressure on Energy Transfer’s Distribution

On May 8, we published a note discussing the fragile state of Energy Transfer's Borderline Safe Dividend Safety Score.  While the firm's distribution is expected to remain covered by cash flow, we were concerned about lower pipeline volumes and counter-party credit risk resulting from weak oil and gas prices.These issues could materially impact Energy Transfer's ability to deleverage, threatening [...]

July 7th, 2020|Uncategorized|

Duke Scraps Major Pipeline Project But Remains Committed to Dividend

On Sunday, Duke Energy and its building partner Dominion Energy announced plans to scrap construction of the Atlantic Coast Pipeline (ACP) following years of delays, cost overruns, and regulatory headaches. Duke Energy owned 47% of this $8 billion natural gas pipeline project and expects to record a multibillion-dollar charge this year as a result of the cancellation. [...]

July 7th, 2020|Uncategorized|

Dominion Announces Major Divestiture Which Will Result in a Q4 Dividend Cut

On Sunday, Dominion announced plans to sell its natural gas transmission and storage business to Berkshire Hathaway in a $9.7 billion deal. This division generated nearly 25% of Dominion's operating earnings. Driven primarily by the loss of ongoing cash flow once the sale closes later this year, Dominion expects to "rebase" (i.e. cut) its dividend by about [...]

July 6th, 2020|Uncategorized|