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Magellan Remains Positioned to Preserve Distribution Despite Disappointing Guidance

Magellan on Tuesday reported earnings, closing out a year which management described as having "the most challenging industry and economic conditions experienced in our 20-year history as a public company." Magellan's units slumped more than 4% on the update after management's guidance indicated that this year may not be much better. The firm's distributable cash flow (DCF) [...]

February 3rd, 2021|Uncategorized|

Exxon Expects to Maintain Dividend as Breakeven Oil Price Falls

Exxon believes its cash flow will cover capital expenditures and the dividend this year even if Brent oil prices average as low as $45 per barrel and its downstream and chemical businesses maintain their lowest margins in at least a decade. As part of the firm's earnings presentation on Tuesday, management laid out capital allocation priorities through [...]

February 3rd, 2021|Uncategorized|

Chevron’s Breakeven Oil Price Now in the $40s, Providing More Support for the Dividend

Chevron on Friday reported fourth-quarter earnings and showed continued progress improving the sustainability of its dividend in a low oil price environment. Driven by capital spending reductions and lower operating expenses, Chevron's breakeven oil price required to cover its capital program and dividend was under $50 per barrel for the second quarter in a row. That's down [...]

February 1st, 2021|Uncategorized|

3M Expects to Return to Profitable Growth in 2021

Macro headwinds, slow-moving restructuring plans, and mounting legal liabilities have weighed on 3M's performance since CEO Michael Roman took the top job in July 2018. On Tuesday, the industrial conglomerate reported earnings which gave investors more confidence in 3M's plan to return to profitable growth following sales and earnings declines the last two years. Organic sales grew 6% in [...]

January 27th, 2021|Uncategorized|

Investors Await Update on PPL’s Asset Sale Plans; Dividend Could Face a Moderate Cut But We Plan to Hold

PPL last August announced plans to sell its U.K. utility operations, which generate a little over half of the firm's earnings. No deal has been announced yet, but the fate of PPL's regular dividend depends on how much of these earnings management can replace by using some of the proceeds from a potential sale to [...]

January 27th, 2021|Uncategorized|

IBM’s Latest Sales Decline Rattles Confidence in Turnaround; Spin-off on Track to Close by Year’s End

IBM shares slumped 10% on Friday following the company's fourth-quarter earnings report. IBM's organic sales fell 8%, marking the fourth straight quarterly decline, but investors were most concerned by a 7% drop in the Cloud & Cognitive Software segment. This high-margin division accounts for roughly 50% of IBM's gross profit and will become an even larger [...]

January 22nd, 2021|Uncategorized|

International Paper Plans to Reduce Dividend by 15-20% Following Spin-off of Printing Papers in Q3

In December, International Paper announced plans to spin off the firm's printing papers business into a standalone, publicly traded company. The spin-off is expected to be completed late in the third quarter of 2021, at which time shares in the spin-off will be distributed to International Paper investors. The transaction is expected to be tax-free for U.S. [...]

January 21st, 2021|Uncategorized|

Political Headwinds Remain an Overhang on Con Edison

The defensive utility sector has trailed the S&P 500 by more than 15% over the past year. Shares of Con Edison have been especially weak, slumping around 15% since mid-November to reach a level not far from their pandemic lows seen last March. With Con Edison's valuation looking unusually cheap compared to historical norms, some [...]

January 20th, 2021|Uncategorized|

Owens & Minor’s Debt Reduction Improves Risk Profile

Owens & Minor stunned many investors in October 2018 when it announced a 71% dividend cut. Shares fell more than 40% on the news as the medical supplies distributor broke its streak of paying uninterrupted dividends since 1977. The company's core customers (hospitals) were putting increased price pressure on the firm in an effort to [...]

December 15th, 2020|Uncategorized|

Pfizer Shifts Dividend Adjustment to Second Quarter of 2021; Income Investors Still to Remain Whole

Pfizer on Friday announced a 2.6% dividend increase for the first quarter of 2021, raising its quarterly payout from 38 cents per share to 39 cents.  However, the company still plans to lower its dividend to reflect the spin-off of its off-patent drug business (about 20% of profits), which closed in November after combining with generic drug [...]

December 14th, 2020|Uncategorized|

AT&T Expects to Keep Dividend Safe But Frozen in 2021 to Prioritize Investments and Debt Reduction

AT&T on Friday kept its dividend frozen at 52 cents per share for the first quarter of 2021, unchanged from the prior four quarters.  This marked the first time in company history that the telecom, media, and entertainment giant has held its dividend flat for more than a year. To retain its status as a [...]

December 13th, 2020|Uncategorized|

Compass Minerals’ Free Cash Flow Returns to Covering Dividend for First Time Since 2014

Compass Minerals has had a speculative Dividend Safety Score since 2017, reflecting the firm's poor dividend coverage, elevated leverage, and various operational missteps. Management has kept the dividend frozen since early 2017. During this period, shares of Compass Minerals have lost 5%, including dividends, while the S&P 500 has gained more than 70%. But under [...]

December 10th, 2020|Uncategorized|

Leggett & Platt’s Record Cash Flow Strengthens Dividend Safety Profile

Earlier this year, Leggett & Platt's dividend looked to possibly be in peril due to the COVID-19 pandemic. Organic sales in the second quarter plunged 31% as stores closed and plants idled, and the firm was on the brink of breaching a financial covenant limiting its leverage. In May, Leggett worked with its banks to amend its [...]

November 23rd, 2020|Uncategorized|

V.F. Corp’s Impressive Digital Growth Returns Confidence in Dividend

Last spring, we downgraded V.F. Corp’s Dividend Safety Score from Safe to Borderline Safe. Mandated store closures and anxious shoppers led to a sharp decline in revenues across the industry.  The revival for retailers was uncertain as the severity and length of the pandemic was not clear.   V.F. Corp's cash flow no longer covered its dividend, leading us to wonder [...]

November 20th, 2020|Uncategorized|

Amazon Launches Online Pharmacy; Walgreens’ Dividend Outlook Remains Stable For Now

Shares of Walgreens fell nearly 10% on Tuesday following Amazon's introduction of its new online pharmacy service. Amazon Prime customers can now order prescriptions for home delivery within a couple of days. Amazon stocks most brand name and generic medications, works with most insurance plans, and will have pharmacists available 24/7 by phone. Besides trying to [...]

November 18th, 2020|Uncategorized|