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 [...]
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% [...]
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 [...]
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 [...]
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. [...]
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 [...]
The Federal Reserve released the results of its 2020 stress test last Thursday, providing the first look at how regulators are assessing the ability of America's largest banks to withstand the coronavirus. The good news is that all 33 of the banks subject to the Fed's test were projected to remain above minimum regulatory capital requirements under [...]
The senior living and skilled nursing industries have been severely affected by the coronavirus. Not only are their residents more vulnerable if they contract COVID-19, but these facilities are designed for communal living, making it more difficult to control transmission of the virus. As a result of the financial challenges caused by the pandemic, several [...]
In April, we discussed how the COVID-19 pandemic caused a drop in demand for non-emergency procedures, increasing financial pressure on MPW's hospital tenants. With many hospitals struggling to earn a profit, it was unclear if MPW's tenants would be able and willing to pay their full rent and keep all of their facilities open. So far, rent [...]
After cautioning in early May that "by no means is the dividend untouchable," National Retail Properties (NNN) appears to feel more confident that its payout will remain secure as lockdown measures continue easing. In April, NNN's 52% rent collection rate was among the weakest of any retail REIT. But at an investor conference on June 8, management [...]
On June 15, STORE Capital (STOR) provided a business update and opted to maintain its dividend for the second quarter. Management was encouraged by an increase in rent collection, giving the team more confidence that cash flow coverage will improve in subsequent months to preserve STORE's financial strength. STORE said it had received 76% of [...]
McDonald's (MCD) provided a business update yesterday which showed continued improvement in sales trends from late March through May. In the U.S. (36% of total revenue), comparable sales were down only 5.1% in May, a meaningful improvement compared to a 19.2% decline in April. Overall, comparable sales worldwide fell about 21% in May, improving from a 39% [...]
On June 16, National Health Investors (NHI) provided a brief business update and maintained its regular dividend for the second quarter. As we discussed in our May note, NHI's dividend faces some uncertainty due to the pandemic's impact on the senior housing industry (nearly 70% of NHI's revenues). Senior housing operators, which have low margins to begin with, [...]
On June 11, ONEOK (OKE) announced it would sell 26 million shares of common stock, increasing its shares outstanding by about 6.3%. The offering was priced at $32 per share, well below the stock's $42 closing price the previous day. As a result, ONEOK's stock slumped about 16% on Thursday and 4% on Friday, finishing the week [...]
Since bottoming on March 23, shares of Con Edison (ED) have returned less than 20% while the utilities sector (XLU) has rallied 40%. As a result, Con Ed's dividend yield still hovers near 4%, above its longer-term average. Like its peers, Con Ed faces a number of challenges stemming from the pandemic including reduced power [...]