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National Retail’s Much Improved Rent Collection Rates Put Dividend on Solid Ground

In April last year, in the midst of a burgeoning pandemic, National Retail Properties was able to collect only 52% of rent payments due. With cash flow failing to cover the dividend, the retail REIT cautioned investors that "by no means is the dividend untouchable." Over the year since, conditions have improved so much that [...]

May 10th, 2021|Uncategorized|

AbbVie’s Debt Reduction Progress Strengthens Dividend Profile

AbbVie has demonstrated enough progress deleveraging its balance sheet, integrating its transformative acquisition of Allergan, and advancing its drug pipeline to earn a Dividend Safety Score upgrade from Borderline Safe to Safe. Progress across these areas is critical to protect the dividend in 2023 and beyond when blockbuster drug Humira (40% of sales) loses exclusivity in America. AbbVie [...]

May 4th, 2021|Uncategorized|

Realty Income to Acquire VEREIT for $16 Billion; Dividend Remains Secure

Realty Income on Thursday announced plans to acquire VEREIT, a retail REIT about half of its size. The all-stock transaction is expected to close in the fourth quarter of 2021. This large acquisition will not impact Realty Income's dividend policy. If anything, the REIT's dividend coverage should improve moderately. Management expects the deal to increase Realty's adjusted [...]

April 30th, 2021|Uncategorized|

Pfizer Decides to Maintain Full Dividend Despite Spin-off as Covid Vaccine Demand Boosts Earnings

Since announcing in July 2019 plans to spin off its established drug business, Pfizer has communicated it would lower its dividend to reflect its reduced standalone cash flow. However, income investors were expected to be kept whole after accounting for the new dividend to be paid by the spinoff, Viatris. This dividend adjustment was expected to occur [...]

April 22nd, 2021|Uncategorized|

Potential Nicotine Reduction Proposal Weighs on Altria’s Longer-term Outlook

The Biden administration is considering proposals to ban menthol and reduce nicotine levels in cigarettes to non-addictive levels, the Wall Street Journal reported on Monday. If these policies move forward, they will almost certainly face legal challenges from the tobacco industry and take years to implement. Altria’s short-term outlook arguably has not changed. But the long-term consequences [...]

April 21st, 2021|Uncategorized|

Coca-Cola’s Volume Returns to Pre-Pandemic Levels; Tax Case Uncertainty Still Looms

With vaccine availability increasing and more economies opening up, Coca-Cola on Monday reported that its total sales volumes in March recovered to levels last seen in 2019 prior to the pandemic. The firm's beverage volumes had declined as much as 25% in April 2020 when numerous countries implemented synchronized lockdowns. While trends slowly improved throughout the year, Coke was [...]

April 20th, 2021|Uncategorized|

JPMorgan Positioned for Dividend Increase This Summer as Capital Restrictions Ease

In response to economic uncertainty created by the pandemic, the Federal Reserve last year imposed additional capital preservation measures on America's largest banks. Banks with more than $100 billion in assets – including JPMorgan – were restricted from repurchasing shares until early 2021, and their dividends are still not allowed to be increased. Total buybacks [...]

April 8th, 2021|Uncategorized|

AT&T Can Sustain Dividend But Delayed Deleveraging Reduces Margin for Error

AT&T purchased $27.4 billion of spectrum at the Federal Communications Commission's recent record-setting auction and plans to reduce its leverage ratio to 2.5x in 2024, according to the firm's March 12 business update.Both of these figures missed our expectations. In the analysis we shared in February, we assumed AT&T would spend $20 billion at the spectrum auction [...]

March 23rd, 2021|Uncategorized|

PPL Seals Deal to Sell UK Assets, Buy a US Utility; Dividend Reduction Expected Within 12 Months

PPL since August has been shopping its U.K. utility operations, which generated 53% of the firm's adjusted earnings last year. On Thursday, management finally found a buyer. PPL will sell its U.K. business to National Grid in a transaction valued at $19.4 billion. PPL shares jumped 5% on the news as the assets achieved a higher value than [...]

March 18th, 2021|Uncategorized|

Excess Industry Capacity Not Enough to Disrupt Enterprise’s Distribution

We have been watching Enterprise Products Partners closely in light of the substantial excess capacity in the midstream industry. Service providers' forecasts of production growth have turned out to be overly optimistic, resulting in too much infrastructure development that has been further accentuated by the pandemic-driven decline in domestic energy production. Source: Enterprise Products Partners, Investor [...]

March 12th, 2021|Uncategorized|

Iron Mountain’s Restructuring Progress Improves Dividend’s Sustainability

Iron Mountain reported earnings on Wednesday and delivered better-than-feared results for the year. Sales in 2020 fell 3%, and adjusted EBITDA was flat. But the bigger story was management's guidance. Iron Mountain expects 2021 organic revenue and adjusted EBITDA to grow by 2-6% and 7-10%, respectively. If realized, this would mark the company's highest level of growth [...]

February 25th, 2021|Uncategorized|

ET to Maintain Distribution Following Acquisition of Enable Midstream; Deleveraging on Track to Accelerate

Energy Transfer on Wednesday announced plans to acquire Enable Midstream in a $7 billion all-equity transaction. This deal will increase Energy Transfer's units outstanding by about 14%, but management plans to maintain the firm's current $0.61 per unit distribution. We estimate the combined company's distributable cash flow (DCF) payout ratio will remain practically unchanged from Energy Transfer's [...]

February 17th, 2021|Uncategorized|

AT&T to Provide Update on Leverage Goals Later This Quarter; Dividend Expected to Be Sustained

Investors will have to wait a little longer to find out how much AT&T spent in a recent record-setting auction for spectrum and how its deleveraging plans will be impacted. As part of its earnings report in late January, AT&T told investors it was still in the quiet period for the FCC's spectrum auction and could not [...]

February 15th, 2021|Uncategorized|

Federal Realty Maintains Dividend Despite Expected Cash Flow Deficit Through Mid-2022

Federal Realty on Thursday reported fourth-quarter earnings and maintained its dividend as rent collections continued improving. The shopping center REIT collected 89% of the rent it billed during the fourth quarter, up from 85% in the third quarter and 72% in the second quarter. However, management expects 2021 to be another tough year. About 85% of Federal's [...]

February 12th, 2021|Uncategorized|

Sysco’s Dividend Likely to Remain Safe But Frozen Until at Least Late 2021 as Restaurant Volumes Recover

Sysco remains challenged by the pandemic as restaurants (more than 60% of revenue), schools, hotels, and other foodservice customers continue operating at relatively low capacity levels. The food distributor's revenue has gradually recovered following a 60% decline in late March last year, but sales were still off 23% last quarter. While the operating environment will [...]

February 11th, 2021|Uncategorized|