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Con Edison’s Dividend Continues to Look Safe Despite Pandemic Impact

Since bottoming on March 23, shares of Con Edison (ED) have returned less than 20% while the utilities sector (XLU) has rallied 40%. As a result, Con Ed's dividend yield still hovers near 4%, above its longer-term average. Like its peers, Con Ed faces a number of challenges stemming from the pandemic including reduced power consumption, higher bad debt expenses, and rockier credit markets. But Con Ed's service territory footprint magnifies some of these issues. The regulated utility generates the vast majority of its earnings from providing electricity and gas to the New York City area, one of the hardest hit parts of the country. In early May, Con Ed reported that its commercial electric delivery volumes were down nearly 20% year-over-year [...]

June 9th, 2020|

NetApp’s Dividend Safety Score Downgraded to “Safe” Due to Growth Challenges

NetApp (NTAP) sells hardware and software to enterprises implementing data storage solutions at on-premise data centers and within cloud environments. Modern companies produce huge amounts of data that can be rapidly analyzed, securely accessed, and easily monitored with NetApp's storage solutions. Competition is stiff. Not only does NetApp contend with hardware providers like Dell, IBM, and numerous startups, but cloud providers (Amazon, Google, etc) have disrupted the traditional model of companies purchasing their own equipment. Still, many enterprises (for regulatory reasons or otherwise) demand on-premise or colocated storage, which is where NetApp excels.

June 2nd, 2020|

Chevron Expects Dividend to Remain Safe Through at Least 2021 Even if Oil Remains Weak

None of the oil majors can cover their capital spending and dividends at today's oil price, even after slashing their investment plans. Oil needs to be closer to $50 to $60 per barrel for these companies to breakeven on their obligations, according to data from Bloomberg. Source: Bloomberg, U.S. Energy Information Administration, Simply Safe Dividends The price of oil has started to rebound off its April lows with lockdowns being lifted and supply falling. But at today's price near $39 per barrel, the oil majors will continue burning through cash.

June 2nd, 2020|

Franklin’s Dividend Safety Score Downgraded to “Safe” as Performance Remains Weak

Franklin (BEN) reported earnings on April 30, providing a first look into the impacts of March's market turmoil on the active fund manager. Naturally, Franklin's investments declined in concert with markets. Assets under management (AUM) fell 17% to $580 billion, leading to a 7% decline in management fee revenue compared to the previous quarter. More notably, a flurry of client redemptions in fiscal Q2 led to a sharp increase of $25.4 billion in net outflows from Franklin's equity and fixed income funds.

June 2nd, 2020|
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