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Gilead’s Dividend Expected to Remain Safe Following $21 Billion Acquisition of Immunomedics

On September 13, Gilead announced plans to acquire oncology company Immunomedics for $21 billion. Once the deal closes, we estimate Gilead's leverage ratio will increase from about 0.4x to around 2.0x, marking its highest level in at least a decade. In light of Gilead's higher financial leverage, we are downgrading the firm's Dividend Safety Score from Very Safe to Safe. [...]

September 29th, 2020|Uncategorized|

Exxon Makes Final Push to Protect Dividend; We Plan to Continue Holding Our Shares for Now

Exxon Mobil has finally drawn a line in the sand with its balance sheet. During its earnings call in late July, the company said it does not plan to take on additional debt during this oil market downturn.  Instead of borrowing more money to fund the dividend until oil prices improve, Exxon hopes to keep [...]

September 25th, 2020|Uncategorized|

Magellan Gains Confidence in Distribution Coverage as Fuel Demand Tracks Expectations

Speaking at an investor conference on September 9, Magellan CEO Mike Mears reiterated his confidence in the firm's guidance and distribution safety. Mr. Mears said demand for gasoline, diesel, and jet fuel tracked Magellan's projections in July and August, keeping the partnership on track to meet its full-year financial targets. "Right now, based on what [...]

September 21st, 2020|Uncategorized|

Annaly’s Dividend Coverage Has Improved but Longer-term Risks Remain

Annaly, the largest mortgage REIT, has lowered its dividend twice in the last two years, including a 12% cut announced in June. As we discussed in May 2019, Annaly's dividend has looked risky under our Dividend Safety Score system for years. While we continue to believe that mortgage REIT dividends are unreliable over a full economic cycle, Annaly's [...]

September 19th, 2020|Uncategorized|

Kraft Heinz Takes Action to Reduce Leverage, Improving Dividend Safety Profile

Kraft Heinz hosted its annual investor day on September 15 and announced several actions that improve the firm's dividend safety outlook. Therefore, we are upgrading Kraft Heinz's Dividend Safety Score from Unsafe to Borderline Safe. The packaged food maker previously cut its dividend in February 2019, but its smaller payout continued looking speculative due to the firm's debt-saddled [...]

September 15th, 2020|Uncategorized|