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STORE Maintains Dividend as Retail Rent Collection Improved in June

On June 15, STORE Capital (STOR) provided a business update and opted to maintain its dividend for the second quarter. Management was encouraged by an increase in rent collection, giving the team more confidence that cash flow coverage will improve in subsequent months to preserve STORE's financial strength. STORE said it had received 76% of June rent to date. That's up from 67% in May and 70% in April. The increase was led by health clubs, full-service restaurants, and family entertainment centers. Only one new rent deferral request was received in June, too. "STORE is maintaining our $0.35 dividend and we'll pay it as scheduled on July 15. The announcement reflects our Board's desire to maintain our dividend, together with [...]

June 18th, 2020|

McDonald’s Dividend Remains a Priority as Sales Trends Improve

McDonald's (MCD) provided a business update yesterday which showed continued improvement in sales trends from late March through May. In the U.S. (36% of total revenue), comparable sales were down only 5.1% in May, a meaningful improvement compared to a 19.2% decline in April.  Overall, comparable sales worldwide fell about 21% in May, improving from a 39% drop in April. As lockdowns continue lifting, additional stores reopening will hopefully drive a continuation of these trends.  As of June 15, approximately 95% of McDonald's 38,000-plus locations were open. That's up from 75% at the end of April. Franchisees are requiring less financial assistance from McDonald's as a result.  In March, when a lot of markets were immediately shut down, McDonald's felt greater urgency [...]

June 17th, 2020|

NHI Maintains Dividend For Now Despite Continued Decline in Senior Housing Occupancy

On June 16, National Health Investors (NHI) provided a brief business update and maintained its regular dividend for the second quarter. As we discussed in our May note, NHI's dividend faces some uncertainty due to the pandemic's impact on the senior housing industry (nearly 70% of NHI's revenues). Senior housing operators, which have low margins to begin with, face higher labor and equipment costs to protect their vulnerable populations from COVID-19, and occupancy is falling as move-in activity freezes.As a landlord, NHI is insulated from these unfavorable trends as long as its tenants can continue paying their rent. But NHI's three largest tenants, which account for about 44% of the firm's rent, had somewhat fragile rent coverage ratios (i.e. cash flow to rent [...]

June 17th, 2020|

ONEOK Retains “Borderline Safe” Dividend Safety Score Following Stock Sale Announcement

On June 11, ONEOK (OKE) announced it would sell 26 million shares of common stock, increasing its shares outstanding by about 6.3%. The offering was priced at $32 per share, well below the stock's $42 closing price the previous day. As a result, ONEOK's stock slumped about 16% on Thursday and 4% on Friday, finishing the week near $34 per share. With ONEOK's dividend yield shooting back above 10%, income investors are left wondering how this action could affect the firm's dividend safety. For now, we are maintaining ONEOK's Borderline Safe Dividend Safety Score. On one hand, ONEOK's capital raise improves its cash on hand and helps reduce leverage.

June 15th, 2020|
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