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These are our most recent articles. Also see which stocks have been this week’s best and worst performers.
Economic Headwinds Not a Threat to Starbucks’ Dividend
Starbucks shares have fallen nearly 40% this year as inflation and Covid-related lockdowns in China have weighed on the company's profitability and outlook. With no clear end to these economic obstacles, Starbucks has removed guidance for the back half of this fiscal year despite confidence these issues will eventually wane. While Starbucks may need to endure a few more challenging quarters, we believe the company's long-term outlook is unchanged, and the dividend remains safe.That said, inflation remains a concern and has been felt more acutely by Starbucks than some retailers because the coffee chain giant generates most of its revenue from company-owned stores rather than licensed or franchised stores.
Oxy’s Dividend Should Continue Being Restored as Balance Sheet Strengthens
Occidental Petroleum (OXY) has used the strong oil price environment to pay down nearly half of the debt it took on in 2019 to fund its pricey, ill-timed acquisition of independent oil and gas producer Anadarko. With net debt falling from about $35 billion nearly two years ago to an expected $20 billion this quarter, we now expect Oxy's leverage ratio to remain at a reasonable level even at an oil price of $50 or $60 per barrel. Management intends to continue using free cash flow to deleverage the business until Oxy's net debt falls closer to $15 billion. At that time, the BB+ rated shale oil producer hopes to regain an investment grade credit rating.
Walmart’s Payout Remains Safe Despite Worsening Retail Environment
Shares of Walmart on Tuesday fell more than 11% after a rare earnings miss was reported along with concerns about a deteriorating retail environment, marking the company's largest single-day loss since the infamous Black Monday in 1987. The discount store operator heads into the weekend having lost around 20% of its market value in just four days. Operating income contracted by 23% last quarter despite sales growing a modest 2%, reflecting unexpectedly high costs that pressured the company's profit margins.
Exxon’s Debt Reduction Progress Improves Dividend Safety Profile
With oil prices more than doubling since the beginning of 2021 to over $100 a barrel, Exxon has used its surging cash flow to repay practically all of the debt it took on during the pandemic. As a result, the integrated oil giant's debt to capital ratio, or gearing, has fallen from a peak of 29.2% in 2020 to 21.2%. Gearing measures the proportion of a company's financing that is from debt rather than equity. Exxon's gearing now sits at the low end of management's 20% to 25% target range and near its pre-pandemic level of 19.1%.