UGI Corporation has a dividend yield nearly twice its historical five-year average.  Naturally, this is leading some investors to question the safety of UGI’s dividend. So, what’s weighing on the stock?  The biggest concern appears to be the timing of increased leverage shortly before an economic crisis brought upon by an unexpected global pandemic. In 2019 UGI completed a merger with AmeriGas, a propane distribution company, and acquired the Columbia Midstream Group, a midstream services business.   These deals totaled over $3.7 billion in value.  For context, UGI’s market cap is about $7 billion. This spending led to a significant jump in leverage by year-end.  UGI’s debt had reached its highest level in the past decade.

AT&T reported earnings on July 23, providing a more complete look at how its expansive business is performing during this economic downturn. For the most part, there were no big surprises. Revenue declined by about 9% and EBITDA dipped 6%, driven by a steep pandemic-related slump at WarnerMedia. Content production and theaters were shut down, and the lack of sports hurt advertising sales. Pay-TV subscriber losses also remained elevated, amplified by some hotels and restaurants canceling their services. However, as we've discussed before, AT&T also has a number of less cyclical businesses. For example, wireless services and equipment account for over 40% of the firm's revenue and have remained fairly steady.

Philip Morris reported earnings on July 21 and made clear that it remains committed to its dividend despite uncertainties created by the pandemic:  "Our balance sheet and financial position are strong, and our commitment to the dividend remains unwavering."– CFO Emmanuel Babeau As expected, lockdown measures and reduced social gatherings reduced demand for combustible cigarettes, which experienced a 17.6% decline in shipment volumes. However, IQOS heated tobacco volumes grew by 24%, increasing Philip Morris's mix of reduced-risk products (RRPs) to 24% of net revenues (up from 18.7% in 2019 and 0.2% in 2015). Philip Morris had expected its pace of IQOS user growth to slow as the pandemic would limit the firm's ability to engage with consumers face-to-face in retail stores. Needless [...]

Coca-Cola reported earnings on July 21, closing the books on "what has arguably been the toughest and most complex quarter in Coca-Cola history," according to Chairman and CEO James Quincy. As expected, organic sales fell 26% due to pandemic-related challenges in away-from-home markets, which account for about half of Coca-Cola's revenue and include restaurants, bars, cinemas, and sports arenas. However, easing lockdown measures around the world have improved business trends. In April, Coca-Cola's global unit case volumes declined 25%. Case volume fell only 10% in June and is down mid single digits globally thus far in July.  Management expects the future trajectory for away-from-home sales to closely correlate with the easing of lockdowns through the rest of the year.  Coca-Cola acknowledged that [...]