Kellogg has announced plans to split into three independent companies, believing that separating its operating segments will provide better autonomy and room for growth while helping its rangebound stock price break higher as investors value each business separately.While details still need to be finalized, including board approval and a favorable ruling from the IRS, the tax-free spinoffs are expected to occur by the end of 2023.Management has reiterated its commitment to the dividend and plans to keep income investors whole in the aggregate, with each emerging company assuming responsibility for part of the payout. As such, we are maintaining Kellogg's Safe Dividend Safety Score.

The U.S. Food and Drug Administration (FDA) plans to take Juul's e-cigarettes off the market, the Wall Street Journal reported on Wednesday. Shares of Altria fell as much as 10% on the news. Altria paid $12.8 billion for a 35% stake in Juul in 2018. The Marlboro maker made this investment, which has since been written down to $1.6 billion, to gain exposure to allegedly less harmful vaping products that seemed poised to win over a growing number of cigarette smokers. However, Juul has faced increased regulatory scrutiny in recent years as the vaping giant's flashy marketing, fruity flavors, and sleek USB-like device fueled a spike in youth e-cigarette use.

Founded in 1961, Lancaster sells branded frozen dinner rolls and garlic bread, croutons, salad dressings, bottled sauces, and other specialty food products to retailers and restaurants. Compared to its peers, Lancaster has been hit harder by commodity cost inflation due to its higher exposure to dressings, which we estimate account for at least one-third of sales. Soybean oil is used in most salad dressings, and prices have surged this year due to drought conditions hurting crops and the Russian invasion of Ukraine, a leading exporter of certain edible oils. 

Demand for refrigerators, dishwashers, laundry machines, and other big-ticket appliances seems likely to slow further in the months ahead following two pandemic-fueled bumper years. Evidence is stacking up that consumers are shifting more of their spending from goods to services, with many households feeling pinched by persistent inflation and rising interest rates. Big-box retailer Target in May warned that it had seen "a rapid slowdown" in discretionary merchandise categories such as apparel, home goods, and hardlines. This left the company with too much inventory, particularly in bulky categories such as kitchen appliances.

Stanley Black & Decker has paid uninterrupted dividends for 146 consecutive years, a streak we expect will continue despite a handful of macro headwinds that have sent shares of the world's largest tool maker slumping over 40% in 2022. Stanley's core portfolio of branded power and hand tools depends on about 100 manufacturing plants and 45 distribution centers around the globe, with approximately 40% of sales made outside of the U.S. With many Asia-based production plants located far from big-box retailers and other customers, Stanley's sprawling footprint has exposed the company to numerous supply challenges and surging transportation costs.

Since our last note on Clorox in February, inflation has accelerated and run hotter than expected. Rising costs have further squeezed earnings and driven the firm's trailing payout ratio to over 100%. Despite the operating environment turning even more challenging than anticipated, we believe Clorox's long-term outlook remains intact, and the company's dividend remains safe. However, we do expect inflationary challenges to persist for a while longer. From resin used in plastic containers to non-woven fabrics for wipes products, prices of the cleaning product maker's essential materials have risen by 25% to 50% over the last two years, on top of the overwhelming increased costs to ship goods.

Cracker Barrel's operating margin sits at roughly half its pre-Covid level, reflecting double-digit commodity and wage inflation along with dine-in traffic that has yet to recover fully from the pandemic's effects. As earnings pressures mount, Cracker Barrel's payout ratio may creep further towards 100%, a level not seen since the onset of the pandemic in 2020. We expect Cracker Barrel to remain committed to its dividend during this difficult period, but the path back to "normal" profitability and dividend coverage will take time.

Shares of STORE Capital have trailed the broader market this year, having dropped almost 25%. Rising interest rates and growing anxiety around consumers' financial health seem to be the biggest concerns.While STORE has built a portfolio of nearly 3,000 properties filled primarily with e-commerce-resistant businesses like restaurants and gyms to combat the long-term headwinds of online shopping, the REIT's tenants are not immune to the inflationary pressures placed on consumers.Even so, STORE's broad tenant and geographical diversification help spread this inflationary risk over 100 different industries and almost 600 clients, none accounting for more than 3% of total rent. 

Starbucks shares have fallen nearly 40% this year as inflation and Covid-related lockdowns in China have weighed on the company's profitability and outlook. With no clear end to these economic obstacles, Starbucks has removed guidance for the back half of this fiscal year despite confidence these issues will eventually wane. While Starbucks may need to endure a few more challenging quarters, we believe the company's long-term outlook is unchanged, and the dividend remains safe.That said, inflation remains a concern and has been felt more acutely by Starbucks than some retailers because the coffee chain giant generates most of its revenue from company-owned stores rather than licensed or franchised stores.

Occidental Petroleum (OXY) has used the strong oil price environment to pay down nearly half of the debt it took on in 2019 to fund its pricey, ill-timed acquisition of independent oil and gas producer Anadarko. With net debt falling from about $35 billion nearly two years ago to an expected $20 billion this quarter, we now expect Oxy's leverage ratio to remain at a reasonable level even at an oil price of $50 or $60 per barrel. Management intends to continue using free cash flow to deleverage the business until Oxy's net debt falls closer to $15 billion. At that time, the BB+ rated shale oil producer hopes to regain an investment grade credit rating.