The coronavirus pandemic creates several challenges for Iron Mountain (IRM). The business seems likely to remain a cash cow and has reasonable liquidity, but these emerging issues have potential to reduce the REIT's financial flexibility. This could be problematic given Iron Mountain's ongoing investments to evolve its business model for the digital world, plus the firm's already elevated leverage profile. The dividend is central to Iron Mountain's investment case. But depending on the severity and duration of COVID-19 headwinds that impact the business, it's not out of the question that management could reduce the dividend to protect the firm's balance sheet as it continues investing in its future. Based on our analysis below, we are downgrading Iron Mountain's Dividend Safety [...]

W.P. Carey (WPC) reported earnings this morning. Thanks to its diversified footprint, favorable retail exposure, and disciplined underwriting, the REIT collected over 95% of April rents and reiterated support for its dividend: Our capital needs in the near term are minimal, and we continue to expect that our earnings will more than cover our dividend. W.P. Carey owns over 1,200 net-leased properties focused on industrial (24% of rent), office (23%), warehouse (22%), retail (17%), and self-storage (5%) markets. Only 2% of the company's rent is from retail markets that are most impacted by COVID-19 lockdowns: fitness facilities, theaters, and restaurants. Almost none of that rent was paid. About two-thirds of W.P. Carey's retail rent comes either from do-it-yourself retailers or from grocery, [...]

Royal Dutch Shell (RDS.B) announced plans to reduce its dividend by 66%, marking its first cut since World War II. Shares of Shell are down about 13% in early trading. Based on their current price and the new payout, shares have a dividend yield near 4%. Shell had a low (45) Borderline Safe Dividend Safety Score prior to this announcement. The company's murky score reflected Shell's elevated leverage and poor dividend coverage in the short term, partially offset by management's past commitment to the payout and the firm's ability to borrow for a period of time until prices improved.

Caterpillar (CAT) reported earnings on Tuesday, and the coronavirus pandemic's impact was already evident in its results; sales fell 21% and profits tumbled 39%.  Management said that the impact of COVID-19 on Caterpillar's business "has been significantly more severe and chaotic than any cyclical downturn we had envisioned." But this isn't Caterpillar's first rodeo, and the company enters this downturn with the financial and operational strength necessary to continue supporting its dividend: "We continue to expect our strong financial position to support the dividend. As a reminder, Caterpillar has paid a quarterly dividend every year since 1933 through a variety of challenging business conditions. We remain committed to returning substantially all our free cash flow to shareholders through the cycles." – CEO [...]