Pfizer on Friday announced a 2.6% dividend increase for the first quarter of 2021, raising its quarterly payout from 38 cents per share to 39 cents.  However, the company still plans to lower its dividend to reflect the spin-off of its off-patent drug business (about 20% of profits), which closed in November after combining with generic drug maker Mylan to form a new publicly traded company called Viatirs. We thought Pfizer's dividend reduction might come in the first quarter since the spin-off transaction closed last month, but the adjustment will now take place in the second quarter since that is when Viatris will begin paying dividends.  In its press release on Friday, Pfizer confirmed that new dividends paid by Viatris will fully [...]

AT&T on Friday kept its dividend frozen at 52 cents per share for the first quarter of 2021, unchanged from the prior four quarters.  This marked the first time in company history that the telecom, media, and entertainment giant has held its dividend flat for more than a year. To retain its status as a dividend aristocrat, AT&T has until the fourth quarter of 2021 to increase its dividend.  That would keep AT&T’s total dividends per calendar year on the rise, which is how S&P calculates dividend growth streaks when maintaining its dividend aristocrats index. Semantics aside, a dividend freeze often signals that a business faces stress and desires to be more conservative with its cash flow. In AT&T’s case, we’ve discussed how the [...]

Compass Minerals has had a speculative Dividend Safety Score since 2017, reflecting the firm's poor dividend coverage, elevated leverage, and various operational missteps. Management has kept the dividend frozen since early 2017. During this period, shares of Compass Minerals have lost 5%, including dividends, while the S&P 500 has gained more than 70%. But under a new CEO since May 2019, Compass Minerals has made progress on several fronts. With free cash flow now covering the dividend for the first time since 2014 and leverage falling to its lowest level since 2015, we are upgrading Compass Minerals' Dividend Safety Score to Borderline Safe. Compass Minerals boasts an operating history dating back to 1844 and is a leading producer of salt (used [...]

Earlier this year, Leggett & Platt's dividend looked to possibly be in peril due to the COVID-19 pandemic. Organic sales in the second quarter plunged 31% as stores closed and plants idled, and the firm was on the brink of breaching a financial covenant limiting its leverage. In May, Leggett worked with its banks to amend its covenants and achieve greater flexibility to manage through the downturn. This included retaining its ability to continue paying dividends. However, we noted that another Dividend Safety Score upgrade was unlikely until Leggett's leverage fell and the pandemic's longer-term impact on consumer spending became clearer. With another quarter now in the books, Leggett's diversified business has staged an impressive recovery, resulting in material improvements to the firm's leverage [...]