AT&T's long-anticipated dividend reduction became official last week as the telecommunications giant reduced its payout by 47%, in line with management's previous guidance. With the firm's rebased dividend in place, we are upgrading AT&T's Dividend Safety Score to Safe. This reflects the company's improved financial position and more defensive business mix. Going forward, AT&T's dividend will consume roughly 40% of the company's free cash flow, down from around 60% previously. Retaining more cash flow provides AT&T with flexibility to increase investment in 5G wireless and fiber internet while enabling faster debt reduction.

Earlier this year, PPL cut its dividend by around 50%, an expected move following the firm's divesture of its U.K.-based utility operations that previously generated roughly half the company's earnings.This payout reduction better aligned the dividend with the company's remaining operations in Pennsylvania and Kentucky and to a much more comfortable level that can support future dividend growth.

Shares of Philip Morris International have slumped 15% since Russia invaded Ukraine on February 24. Unlike most companies headquartered in America, Philip Morris has meaningful ties to Russia and Ukraine. Russia accounted for 6% of the firm's 2021 net revenues, and Ukraine added another 2%. These countries also played a key role in Philip Morris's push into so-called reduced-risk products such as heated tobacco, which represented 29% of net revenues last year and are the firm's primary long-term growth driver. Philip Morris's heated tobacco volumes grew 25% in 2021, and Russia accounted for 17% of all shipments. Ukraine has also been called out as an important contributor here, suggesting both countries could combine for over 20% of Philip Morris's heated [...]

This year, CVS Health raised its dividend by 10% after keeping the payout frozen for five years as the company prioritized deleveraging efforts, following the sizable 2018 acquisition of health insurer Aetna.With leverage reduced to pre-acquisition levels, CVS now intends to keep raising the annual payout in line with earnings growth. This plan implies the dividend is likely to grow at a high single-digit pace in the years ahead.

The nation's largest self-storage REIT, Public Storage, has kept its dividend frozen since 2017 despite having the balance sheet and cash flow to support increasing payouts.Given Public Storage's strong financial health, many investors question why dividend growth has remained elusive in recent years – especially when considering REITs are required to distribute at least 90% of taxable income to shareholders.After all, 2021 was a banner year with same store revenue up 11% as more consumers decluttered their living spaces and became self-storage customers. With cash flow rising at its fastest pace in years, Public Storage's payout ratio dropped to historic lows below 70%.

Despite a broad economic recovery, the struggles of skilled nursing facilities (SNFs) amplified by the pandemic continue to loom large.With SNFs accounting for nearly 80% of Omega's portfolio, not much has improved since our note last August. Dividend coverage remains stretched as SNF operators, the REITs tenants, continue to struggle with reduced occupancy rates and labor issues. As such, we are reaffirming Omega's Unsafe Dividend Safety Score.When Covid became a national concern, occupancy at Omega's properties fell from 84% to a low of 72% in January 2021 and has since only modestly improved to 75%. Further problematic is that occupancy rates before the pandemic were already too low, thanks to an oversupply of SNFs that kept many operators struggling to turn a profit.

Intel on February 17 hosted an analyst day to provide more details on its turnaround strategy, which seeks to restore the chip maker's technological leadership position while also building a foundry business to manufacture semiconductors for others. Expanding existing production and constructing new fabs, or chip factories, will require substantial capital investment. For example, Intel expects to spend $40 billion to build four fabs in Arizona and Ohio. Billions more will be spent on equipping current sites with advanced manufacturing technologies. In total, Intel's capital expenditures over the next few years are projected to average around $27 billion annually, or nearly double the firm's historical norm. R&D spending will jump, too. During this period of heavy investment, free cash flow will evaporate. [...]

While many energy stocks have experienced a strong recovery from pandemic lows, midstream providers have struggled to keep up. This underperformance has even included industry leaders like Magellan, which trades with an attractive dividend yield of over 8%.The market's failure to reward Magellan triggers questions about what risks have kept hesitant investors at bay.To be sure, some quality midstream operators are trading at higher valuations and with lower and more reasonable dividend yields. However, Magellan boasts one of the industry's highest credit ratings (BBB+) and is coming off what proved to be a good year for the MLP.Refined transportation volumes, which drive about 70% of the MLP's income and represent fuels such as gasoline, were up 14% in 2021 – [...]

Lumen's stock has slumped more than 20% since reporting earnings on February 9, pushing its dividend yield north of 10%.Formerly known as CenturyLink, the telecom provider issued disappointing 2022 guidance, which caused some investors to worry about Lumen's plan to ramp spending on fiber delivered to consumers and small businesses. Management's big bet on fiber internet service is intended to return the company to sales growth within several years. But the infrastructure required to reach millions of additional households requires substantial investment.  The current deployment plan calls for $1 billion of spending on fiber in 2022 alone, an amount equal to about 10% of Lumen's market cap. Fiber investment is set to increase in 2023, too. Based on Lumen's latest [...]

When the pandemic struck in the spring of 2020, and much of the developed world began sheltering in place, demand for fuel quickly evaporated, leading to tumbling oil prices that turned negative for the first time in history.This sudden and drastic hit to the energy market was short-lived following a quick economic rebound. After being the worst-performing sector in 2020, energy proved the market leader last year.However, while the energy market at large had a banner year in 2021, energy's middlemen, the midstream service providers like Enterprise Products Partners, largely failed to keep pace with the sector.For Enterprise, this underperformance partially resulted from structuring the business so that around 90% of earnings come from fee-based contracts with low volumetric risk. [...]