In March, we discussed the various financial and political challenges facing Wells Fargo (WFC) and the U.S. banking industry due to the COVID-19 pandemic. We concluded that the outlook for dividends had become much blurrier, supporting the Borderline Safe Dividend Safety Scores placed on many banks. Please see our note here for complete background information.  Investing in banks is complicated enough when times are good. Today, investors must grapple with uncertain political and financial pressures that have potential to interfere with dividend payouts. Banks appear to remain in good shape today, but the environment is evolving quickly. The fate of some of their dividends, at least in the short term, could depend on how much caution and help for the community regulators and management teams [...]

Leggett & Platt (LEG) delivered a positive surprise for income investors today: the dividend is being maintained. As we discussed on May 6, the company's payout looked to possibly be in peril due to the coronavirus pandemic. Mattress store closures and idled automotive manufacturing plants drove a 60% decline in Leggett & Platt's revenue in the first week of April. Sales were still down 45% in the third week of April. For perspective, the company's sales never fell more than 30% any given quarter during the 2007-09 financial crisis.  This was especially bad timing because Leggett & Platt was in the middle of deleveraging following a large acquisition in January 2019. As part of this deal, the firm needed to increase the size [...]

Cisco's (CSCO) CEO Chuck Robbins recently described the current environment as "the greatest financial crisis in our lifetime," so it's no surprise that many companies are tightening up their budgets. On Wednesday, market research firm Gartner updated its global IT spending forecast for 2020 and now projects a drop of 8% versus prior expectations calling for a 3.4% increase, according to The Wall Street Journal. Given this backdrop, Cisco (CSCO) delivered better-than-feared earnings on May 13, and we continue to believe that the network-equipment giant remains deserving of its Very Safe Dividend Safety Score. The pandemic has had a mixed impact on Cisco. The firm's revenue fell 8% last quarter, driven by at 15% decline in Infrastructure Platforms (58% of sales). This segment primarily sells [...]

Whirlpool (WHR) reported earnings on April 30 and provided investors with a first glimpse into the impacts of the pandemic on sales in the home appliance maker's two most important regions, the U.S. (54% of 2019 revenue) and Europe (21%). Both regions saw sharp drop-offs in retail sales in March as people began to stay home and stores closed. Demand has since started to recover, albeit slowly. In Italy, demand bottomed out at negative 67% year-over-year in mid-March but has improved each week since. Similar trends were observed elsewhere in Europe.

On April 8, we discussed the coronavirus-related challenges facing Urstadt Biddle (UBA). Our primary concerns were the firm's small size (only 81 properties), concentrated operations in ground zero of the pandemic (New York), relatively high payout ratio entering the crisis (80% to 90%), and signs that numerous tenants (e.g. Staples) may skip their rent. More news has arrived over the past month, and it doesn't bode well for Urstadt Biddle's dividend safety profile. On May 11, New York City's Mayor Bill de Blasio said the city's lockdown will likely continue into June.  Urstadt Biddle's properties aren't located directly in downtown Manhattan, but most of them are within 50 to 75 miles away. Tenants could now be looking at extended lockdowns, making them even less [...]

Simon Property Group (SPG) reported earnings on May 11. Management disclosed few specifics, dodging questions about how much rent was collected in April and the status of its pending acquisition of Taubman. However, CEO David Simon did provide general expectations for the dividend. Based on what management knows today, it sounds like Simon expects by the end of June to reduce its dividend by up to 50% but will continue making its payments in cash (rather than stock). The Board will declare a second quarter dividend before the end of June, and that dividend will be paid in cash. We expect to pay out at least 100% of our taxable income in 2020 in cash. As a point of reference, there have [...]

Ventas (VTR) reported earnings on May 8 and opted not to comment on the dividend other than stating on the earnings call that a decision by the Board would be made in June: As you know, we declared and paid our last quarterly dividend in April. Because we normally pay our next dividend in July, our Board will consider the dividend in mid- to late June. As it always does, our responsible and experienced Board will make a decision using its good faith business judgment, taking into account all of the information available to it at that time. In a situation like the fast moving, rapidly changing global pandemic, we have the advantage of aggregating and analyzing the best and most current information [...]

Tanger (SKT) reported earnings today and suspended its quarterly dividend. The owner of outlet malls will pay the previously-scheduled dividend on May 15, but payouts will cease after that until further notice. By suspending the dividend, Tanger will save $35 million in cash per quarter to help preserve the firm's balance sheet and maintain financial flexibility. It's unclear when the dividend will be reinstated (and at what level). By law REITs must pay out 90% of their taxable income to shareholders, but it's too early say what profit Tanger will earn in the foreseeable future. On March 24, we downgraded Tanger's Dividend Safety Score to Very Unsafe as government-mandated shutdowns of non-essential stores looked to be the nail in the coffin for some of Tanger's tenants and the [...]

Enterprise Products Partners (EPD) reported earnings on April 29. Management reaffirmed their commitment to the distribution, which has been increased for 21 consecutive years:  Finally, I'd like to iterate our financial objectives as to defend and maintain our distribution, our strong balance sheet, and our debt rating; maintain ample liquidity; and continue to high-grade and invest in projects underwritten by high credit quality customers, long-term fee-based contracts, and underpinned by solid long-term fundamentals.– Co-CEO Randy Fowler However, Enterprise's high yield reflects the uncertain environment facing midstream services providers in the months ahead. Low commodity prices, limited storage, and coronavirus-related demand headwinds have caused oil and gas production to begin falling.

Federal Realty (FRT), owner of grocery-anchored shopping centers, reported earnings on Wednesday and revealed that only 53% of April rent was collected. The REIT's properties have long been a stable source of rental income due to their location in large, affluent markets like Silicon Valley and New York. Investments over the past twenty years in nearby office and residential complexes have made Federal Realty's shopping centers even more attractive to tenants. Indeed, Federal Realty's 52-year streak of annual dividend increases is a testament to the robust performance of the company's portfolio of properties. But the coronavirus pandemic is test like none other on the resilience of the firm's portfolio and, subsequently, the dividend.