On September 30, the Federal Reserve extended through the fourth quarter its capital preservation measures on America's biggest banks. Banks with more than $100 billion in assets are not allowed to repurchase shares, and their dividends cannot be increased or exceed net income generated over the past year. Capping the amount of capital that can be returned to shareholders provides more cushion for banks against loan losses and supports lending during these uncertain times. Given the Fed's control over big banks' dividend policies and the uncertain shape of this recession, we have assigned Borderline Safe Dividend Safety Scores to most large banks (including JPMorgan). If the economy tracks towards a worst-case scenario, or political pressure mounts, the Fed could follow the European Central Bank's [...]

Arvind Krishna took over as IBM's new CEO in April 2020 and has wasted no time putting his mark on the company. On October 8, IBM announced plans to spin off its managed infrastructure services business, which accounts for about 25% of IBM's revenue.  The spin-off transaction is expected to be tax free and close by the end of 2021.  Once the separation transaction is completed, IBM shareholders will receive shares in the new public company (to be named at a subsequent date).  From a dividend safety perspective, IBM expects the combined dividends from IBM and the new spinout company to at least equal the firm's pre-spin dividend per share.

Federal Realty on Wednesday presented a business update. The retail REIT said it collected 83% of third-quarter rent, up from 68% in the second quarter. This trend gave management the confidence to raise Federal Realty's dividend by 1% in August, marking the company's 53rd consecutive annual increase. Source: Federal Realty Data, Simply Safe Dividends While higher collections are welcome news, we previously estimated that Federal Realty's pre-pandemic rent revenue could only decline around 15% to 20% before cash flow would fall short of covering the dividend.

Build it and they will come. That was the midstream industry's mantra for much of the last decade as some of the largest firms combined to nearly triple their annual spending on pipelines, storage facilities, and other assets. Source: Simply Safe Dividends, Company Filings This rapid buildout of America's energy infrastructure was in response to the boom in U.S. energy production ushered in by advancements in fracking. After decades of stagnation or decline, domestic oil and gas production surged. Source: U.S. Energy Information Administration, Simply Safe Dividends Midstream infrastructure generally takes many years to earn a return and was put in the ground under the assumption that domestic energy production would remain strong.