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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|

Solid Rent Collection, Additional Federal Support Help NHI’s Outlook

National Health Investors (NHI) has had an Unsafe Dividend Safety Score since May, reflecting the risks posed by its high exposure to senior housing (70% of rental revenue). While NHI does not operate any of its properties, providing some cash flow insulation as long as tenants continue paying rent, many of the REIT's senior housing tenants entered [...]

November 14th, 2020|Uncategorized|

Barring Another Lockdown, Simon’s Cash Flow Can Continue Covering the Dividend For Now

Simon's third-quarter earnings report released on November 9 showed that mall fundamentals remain weak. While the REIT collected 85% of its net billed rents, up from 72% in the prior quarter, Simon's sales were still down 25% year-over-year due to elevated levels of rent deferrals and abatements given to struggling tenants. Tenant bankruptcies and lease expirations also [...]

November 12th, 2020|Uncategorized|

Ventas’ Operating Results Stabilize, Improving Dividend Safety Profile

In June, Ventas cut its dividend by 43% in response to pandemic-driven headwinds impacting its senior housing business (about 50% of net operating income). Occupancy fell to historic lows as restrictions on community access prevented move-ins, and expenses spiked for labor and personal protective equipment. The end result was a dividend that was no longer expected to [...]

November 11th, 2020|Uncategorized|

Pfizer’s COVID-19 Vaccine Shows Promise; Spin-off to Execute November 13 With Dividend Adjustment Next Quarter

Pfizer announced on Monday its COVID-19 vaccine candidate was found to be more than 90% effective, and no serious safety concerns had been observed. The drugmaker and its German partner BioNTech are the first to release successful results from a major clinical trial of a COVID-19 vaccine, according to Reuters. More data continues to be collected, but Pfizer expects [...]

November 9th, 2020|Uncategorized|

Dominion’s Lower Dividend and New Business Mix Improve Safety Profile; We Plan to Hold Our Shares

Dominion made its dividend cut official this week, reducing its fourth-quarter payout by 33% after closing a deal to sell its natural gas transmission and storage business. As we discussed in early July when this news was announced, we are upgrading Dominion's Dividend Safety Score to Safe with the lower dividend now in place. Without its midstream business, Dominion [...]

November 6th, 2020|Uncategorized|

AltaGas’s Falling Leverage Supports Dividend But Firm Will Evaluate Splitting Off Midstream Business

AltaGas generates about 60% of its EBITDA from U.S. regulated gas utilities and the remaining 40% from an integrated midstream business in western Canada which connects natural gas liquids and natural gas to various markets. Source: AltaGas Investor Presentation The company in recent years went through a major transformation which culminated in a 56% dividend [...]

November 2nd, 2020|Uncategorized|

Altria’s Tobacco Business Remains Resilient But Longer-term Growth Uncertainties Linger

Altria's third-quarter earnings report highlighted the tobacco category's resiliency during the pandemic. With consumers spending less on gas and entertainment, plus having more opportunities to smoke while working from home, U.S. cigarette volumes increased last quarter for the first time in years. Similarly, Altria's volume declines continued moderating from a 7% loss in early 2019 to a [...]

October 30th, 2020|Uncategorized|

Exxon Plans to Maintain Dividend in 2021 Contingent on Businesses Getting Back to Normal Cycle Lows

Exxon maintained its dividend for the fourth quarter despite reporting another set of weak earnings results this morning. While Exxon's operating cash flow improved from $0 in the second quarter to $4.4 billion last quarter, the firm remained far from covering its capital expenditures ($3.8 billion) and dividend ($3.7 billion). Despite this ongoing cash flow deficit, management's [...]

October 30th, 2020|Uncategorized|

Omnicom’s Dividend Remains a Top Priority But Digital Acceleration Creates Longer-term Uncertainty

Omnicom reported earnings on October 27. Organic revenue fell 12% as clients in struggling industries such as auto (10% of sales), retail (7%), travel and entertainment (5%), and energy (1%) reduced their marketing spending. Source: Omnicom Earnings Presentation Omnicom's sales decline was better than the company's 23% slump in the second quarter. But investors were disappointed by [...]

October 30th, 2020|Uncategorized|

Valero Stays Committed to Dividend But Needs 2021 Demand Recovery

Valero reported earnings on October 22, recording its second straight quarterly loss as the refining industry continues to be upended by the pandemic. Valero's refineries process crude oil into gasoline, diesel, jet fuel, and other products. With fewer people flying and driving during the virus outbreak, fuel demand remains around 15% below pre-crisis levels. Meanwhile, Valero's feedstock costs have [...]

October 28th, 2020|Uncategorized|

Energy Transfer Cuts Distribution by 50% to Prioritize Deleveraging

Energy Transfer is the latest midstream MLP to slash its distribution, announcing yesterday evening that it will chop its payout in half. Management will get to explain their rationale for the distribution cut when Energy Transfer reports earnings on November 4, but this action was necessary to address the firm's fragile balance sheet. As we discussed in July, Energy [...]

October 27th, 2020|Uncategorized|

Intel Falls on Soft Demand and Remains Under Review for Potential Sale in Our Portfolio

Intel slumped more than 10% on October 23 after reporting third-quarter earnings results. Sales fell 4% year-over-year as consumers opted for cheaper laptops and companies and governments pulled back on datacenter spending. These unexpected COVID-driven headwinds tilted Intel's mix towards lower-priced products, causing gross margins to surprise on the downside as well. Many of these dynamics are [...]

October 26th, 2020|Uncategorized|

Wells Fargo’s Dividend Coverage Improves as Profits Stabilize But Growth Headwinds Persist

Wells Fargo remains challenged by elevated restructuring costs, ongoing legal and remediation charges tied to its fake-accounts scandal, and low interest rates, which reduce the profits earned by its lending businesses (about 50% of revenue). Unlike its peers, Wells Fargo can't expand its balance sheet to help offset margin margin compression in its loan book. [...]

October 23rd, 2020|Uncategorized|

AT&T Shows Signs of Stability as Business Evolution Continues

AT&T shares rallied 5% in early trading today following the company's third-quarter earnings results. The media and telecom giant's revenue declined 5%, better than analysts expected and an improvement compared to the second quarter's 9% slump. AT&T's wireless business (around 40% of sales) recorded its highest level of postpaid phone net adds and lowest churn rate [...]

October 22nd, 2020|Uncategorized|