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Shell Reduces Dividend in Response to Unprecedented Uncertainty Facing Oil Market

Royal Dutch Shell (RDS.B) announced plans to reduce its dividend by 66%, marking its first cut since World War II. Shares of Shell are down about 13% in early trading. Based on their current price and the new payout, shares have a dividend yield near 4%. Shell had a low (45) Borderline Safe Dividend Safety Score prior to this [...]

April 30th, 2020|Uncategorized|

Caterpillar’s Solid Liquidity Expected to Support Dividend

Caterpillar (CAT) reported earnings on Tuesday, and the coronavirus pandemic's impact was already evident in its results; sales fell 21% and profits tumbled 39%.  Management said that the impact of COVID-19 on Caterpillar's business "has been significantly more severe and chaotic than any cyclical downturn we had envisioned." But this isn't Caterpillar's first rodeo, and the company [...]

April 29th, 2020|Uncategorized|

Omnicom Plans to Maintain Dividend

Omnicom (OMC) reported earnings this morning. Despite unprecedented headwinds facing the advertising market due to the coronavirus pandemic, management reaffirmed the company's commitment to its dividend: Our liquidity, balance sheet, and credit ratings remain very strong, and we have no plans to change our dividend policy.  Omnicom recorded 3% organic revenue growth in January and February, but [...]

April 29th, 2020|Uncategorized|

UPS Says Dividend Remains a High Priority as E-commerce Surges

United Parcel Service (UPS) has paid a stable or growing dividend for nearly 50 years. Despite COVID-19, management on Tuesday said that trend is expected to continue: Our dividend remains a high priority and is a hallmark of our financial strength. We are confident our actions will continue to enable us to fund the business [...]

April 29th, 2020|Uncategorized|

Sharp Decline in Elective Procedures Places Pressure on Stryker’s Payout

The outbreak of the novel coronavirus is coming head-to-head with Stryker's 28-year track record of paying uninterrupted dividends. Stryker (SYK) designs and manufactures devices and supplies used in a wide variety of medical procedures. 73% of Stryker's sales are generated in the U.S. In March, the Centers for Medicare and Medicaid Services (CMS) recommended that elective surgeries [...]

April 28th, 2020|Uncategorized|

Simon’s Dividend Risk Rises as More Tenants Become Distressed

On March 19, we wrote the following about Simon's (SPG) Dividend Safety Score:  The risk to Simon's dividend hinges largely on how long store closures persist and how optimistic management is about retail performance once stores reopen. A further downgrade to Unsafe could be issued quickly if closures appear they will last longer or if widespread rent defaults become [...]

April 25th, 2020|Uncategorized|

Tanger’s Dividend Looks Increasingly Fragile as Retail Headwinds Mount

In May 2019, we downgraded Tanger's (SKT) Dividend Safety Score to Borderline Safe and wrote: With disruption (and rising store closures) looking more permanent, Tanger's occupancy level, rent rates, and cash flow could come under even greater pressure, and potentially for much longer than management and analysts currently expect...As conservative investors, we prefer to own businesses that have more [...]

April 25th, 2020|Uncategorized|

STORE’s Cash Flow Not Expected to Cover Dividend for Foreseeable Future

Last week, we discussed how the coronavirus pandemic was impacting STORE Capital's (STOR) tenants significantly. Based on STORE's documented tenant mix, we estimated that between 40% and 60% of rent was at risk of deferral. Since then, STORE participated in a call with Morgan Staley to provide an update to investors on the firm's results. In the call, management [...]

April 24th, 2020|Uncategorized|

Coca-Cola Will Continue Prioritizing Dividend Despite Weakness in Away-From-Home Channels

Earlier this year, Coca-Cola (KO) announced its 58th consecutive annual dividend increase. When the company reported earnings on April 21, management reaffirmed their commitment to the dividend: We will of course continue to focus on protecting the progress we made on working capital and free cash flow in 2019. And in this context, our capital allocation priorities [...]

April 24th, 2020|Uncategorized|

AT&T Reports Initial Impact from COVID-19, Expects to Maintain Healthy Dividend Coverage

AT&T (T) reported earnings on April 22 and reiterated confidence in its dividend despite the uncertainty caused by COVID-19:  No one knows the full duration and magnitude of the situation, but we have been running several different stress test scenarios with varying degrees of severity. Through it all, we expect to come through this healthy and expect [...]

April 24th, 2020|Uncategorized|

Philip Morris Remains Fully Committed to Dividend

Philip Morris (PM) reported earnings on April 21 and reiterated the firm's commitment to its dividend during these uncertain times: We also expect that strong cash flows will exceed cash requirements, including the funding of dividends to which we remain fully committed...Crucially, our organization, liquidity, and balance sheet are strong. We'll continue to protect and support our [...]

April 24th, 2020|Uncategorized|

Raytheon and United Complete Merger; Dividend Investors Expected to be Kept Whole with 2-3% Yield

Earlier this month Raytheon completed its all-stock merger with United Technologies, forming Raytheon Technologies (RTX). Several weeks before the merger closed, United Technologies executed the spin-offs of its Otis (OTIS) elevators and Carrier (CARR) building systems businesses. United Technologies stock remained outstanding but the company changed its name to Raytheon Technologies and its ticker symbol to RTX. Since Raytheon [...]

April 24th, 2020|Uncategorized|

Kimco’s Dividend Risk Rises as Retail Woes Mount

The outlook for retail REITs continues to dim as the coronavirus pandemic drags on and fewer businesses are able to pay rent. Nareit, a producer of REIT research, recently conducted a survey of 54 publicly-listed REITs and found that shopping center REITs have only collected 46% of their rent this month as of mid-April. Rent collection rates [...]

April 23rd, 2020|Uncategorized|

S&P Downgrades Disney’s Credit Rating, Adding Uncertainty to the Dividend

Earlier today, Standard & Poor's lowered Walt Disney's (DIS) credit rating from A to A- and maintained a negative outlook on the firm's rating. Given the rising credit rating pressure facing Disney, management's desire to maintain a mid-single A leverage profile, and the increased likelihood of theme park profitability remaining weak for longer, we are [...]

April 23rd, 2020|Uncategorized|

COVID-19 Threat Continues to Mount, Pressuring Ventas’ Dividend

On March 16, we discussed how the coronavirus pandemic could hurt the performance of Ventas' (VTR) senior housing business. Since then, the number of challenges facing Ventas across almost all parts of its portfolio has continued to rise. As a result, the firm's cash flow now seems likely to fall short of its dividend for the foreseeable [...]

April 23rd, 2020|Uncategorized|