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Power Outages Increase Political Scrutiny of Con Edison But Dividend Profile Remains Stable

Con Edison faces intense political pressure following Tropical Storm Isaias, which hit the East Coast on August 4. Isaias caused the second largest number of power outages in Con Edison's history; only Superstorm Sandy in 2012 caused more outages. Over 10% of Con Edison's customers lost power. Within that group, 25% of customers were still [...]

August 28th, 2020|Uncategorized|

Best Buy Sees Growth Accelerate With All Stores Reopened; Dividend Safety Score Upgraded to “Safe”

Best Buy's performance during the pandemic has exceeded our expectations, prompting us to upgrade the company's Dividend Safety Score from Borderline Safe to Safe. Best Buy reported earnings results on August 25, recording comparable sales growth of 5.8% despite its stores being open by appointment only for about half of the quarter. With all of its stores now fully reopened, sales [...]

August 26th, 2020|Uncategorized|

Target’s Dividend Safety Score Upgraded to “Very Safe” on Financial Strength, Store Performance

In 2017, Target's dividend yield approached 5% as investors worried about the long-term fate of big-box retailers in the age of Amazon. The company's same-store sales had started declining as more shopping migrated online, and Target's margins dipped as management invested in a digital-focused turnaround plan. Despite these bumps in the road, Target always maintained [...]

August 26th, 2020|Uncategorized|

Portland General Electric Expects to Maintain Dividend Despite Surprise Trading Loss

On August 24, Portland General Electric (PGE) disclosed that its energy trading activities in wholesale electricity markets will incur third quarter losses of up to $155 million. For context, the regulated utility over the last year generated total net income of about $240 million. Shares closed 8% lower on the news. As a result of this surprise [...]

August 26th, 2020|Uncategorized|

Churchill Downs’ Dividend Safety Score Downgraded to “Borderline Safe” as Derby Will Be Held Without Fans

The pandemic has caused significant disruption for Churchill Downs' business. The firm's flagship event, the Kentucky Derby, was delayed from early May to September, hurting its horse racing operations (28% of 2019 adjusted EBITDA). Meanwhile, casinos (58%) were forced to close temporarily. And although the online gaming business (14%) has continued growing, Churchill Downs' second-quarter [...]

August 24th, 2020|Uncategorized|

Solar’s Dividend Safety Score Upgraded on Portfolio Resilience, Expected Payout Ratio Improvement

Solar Senior Capital is an externally managed business development company that invests primarily in loans of private middle market firms to generate income. The company's portfolio is valued at around $500 million and diversified across 215 borrowers in over 115 industries, with an average issuer exposure of less than 0.5% of the portfolio. No industry [...]

August 21st, 2020|Uncategorized|

BHP’s Results Helped by Rising Iron Ore Price But Variable Dividend Policy Muddies Income Outlook

BHP is the largest mining company in the world. The firm extracts and processes iron ore (63% of EBITDA), copper (20%), petroleum (10%), and coal (9%). Commodity businesses generally have little control over the selling price of their products and must invest heavily to secure and extract new resources. Coupled with their high fixed costs [...]

August 19th, 2020|Uncategorized|

Analog Devices Expects to Maintain Dividend Policy Following Planned Acquisition of Maxim

In July, Analog Devices announced plans to acquire semiconductor company Maxim for more than $20 billion. Assuming the deal gains approval from regulators and shareholders, it is expected to close by the summer of 2021. From a dividend safety perspective, Analog Devices plans to maintain its existing dividend policy and will continue targeting 7% to 15% annual [...]

August 18th, 2020|Uncategorized|

Cisco Braces for a Longer Downturn But Continues Offering a Safe Dividend

Shares of Cisco fell more than 11% on Thursday following the company's latest earnings release. Sales declined 9% last quarter, slightly better than expected, but management is not seeing a V-shaped recovery. CEO Chuck Robbins said the environment feels "very much like it felt 90 days ago" and provided guidance for a somewhat steeper revenue decline [...]

August 14th, 2020|Uncategorized|

Qualcomm Wins Appeal, Ending Legal Challenges; Dividend Safety Score Upgraded to “Safe”

On Tuesday, a federal appeals court issued Qualcomm a favorable ruling, reversing a May 2019 victory for the U.S. Federal Trade Commission which had accused the chipmaker of charging excessive royalty rates for its patents. The 2019 ruling threatened to disrupt the lucrative licensing practices that historically generated over 70% of the company's operating profits. As we discussed in December [...]

August 12th, 2020|Uncategorized|

PPL Stock Jumps on Plans to Shop U.K. Business; Dividend Safety Score Downgraded to “Borderline Safe”

PPL's stock rallied 5% today after the firm announced plans to initiate a process to sell its U.K. operations. PPL's U.K. utility business generated 52% of the company's 2019 segment earnings but faced an uncertain longer-term outlook. The current regulatory framework driving PPL's U.K. electricity distribution business ends in 2023, and Britain's energy regulators appear eager to reduce [...]

August 10th, 2020|Uncategorized|

UGI’s Dividend Continues Looking Safe Despite Some Softness in Propane Markets

UGI Corporation has a dividend yield nearly twice its historical five-year average.  Naturally, this is leading some investors to question the safety of UGI’s dividend. So, what’s weighing on the stock?  The biggest concern appears to be the timing of increased leverage shortly before an economic crisis brought upon by an unexpected global pandemic. In 2019 [...]

August 7th, 2020|Uncategorized|

AT&T Continues Generating Solid Cash Flow Despite the Pandemic and Remains Committed to the Dividend

AT&T reported earnings on July 23, providing a more complete look at how its expansive business is performing during this economic downturn. For the most part, there were no big surprises. Revenue declined by about 9% and EBITDA dipped 6%, driven by a steep pandemic-related slump at WarnerMedia. Content production and theaters were shut down, and the [...]

July 31st, 2020|Uncategorized|

Coca-Cola Sees Improving Volume Trends and Remains Committed to Dividend Growth

Coca-Cola reported earnings on July 21, closing the books on "what has arguably been the toughest and most complex quarter in Coca-Cola history," according to Chairman and CEO James Quincy. As expected, organic sales fell 26% due to pandemic-related challenges in away-from-home markets, which account for about half of Coca-Cola's revenue and include restaurants, bars, cinemas, and [...]

July 22nd, 2020|Uncategorized|

Philip Morris Expects Free Cash Flow to Continue Covering Dividend as Reduced-Risk Products Grow

Philip Morris reported earnings on July 21 and made clear that it remains committed to its dividend despite uncertainties created by the pandemic:  "Our balance sheet and financial position are strong, and our commitment to the dividend remains unwavering."– CFO Emmanuel Babeau As expected, lockdown measures and reduced social gatherings reduced demand for combustible cigarettes, which experienced [...]

July 22nd, 2020|Uncategorized|