Over the weekend, JPMorgan Chase (JPM) Chairman and CEO Jamie Dimon published his annual letter to shareholders. Mr. Dimon laid out the bank's response to the coronavirus pandemic and did his best to set expectations for the firm's future financial performance, including JPMorgan's dividend. First, Mr. Dimon said he expects a "bad recession" with financial stress that will at least be similar to the 2008 financial crisis. Most large banks including JPMorgan have already suspended their share repurchases to begin preserving capital. Households and businesses have an unprecedented need for credit since many of them have seen their cash flow disappear almost overnight. 

On March 12, we downgraded Walt Disney's (DIS) Dividend Safety Score from Very Safe to Safe.  We believed the coronavirus could threaten Disney's credit rating and increase pressure on management to pay down debt as cash flow slumped across Disney's theme parks and studio films. As we discussed, the coronavirus-related demand shock came at a less than ideal time as only a year ago Disney closed its $71 billion acquisition of 21st Century Fox, doubling its leverage in the process. Although only a few weeks have passed since our last note and Disney's stock price has actually increased slightly since then, a lot has changed:

On March 20, we published a note on Magellan Midstream Partners (MMP) and maintained our Safe rating after concluding that the firm appeared "to have the balance sheet, distribution coverage, and commitment to its payout to wait out better times." Less than a week later on March 26, Magellan said it was indeed maintaining its distribution guidance for the year, which even calls for a 3% increase. Like most midstream businesses, Magellan is feeling the effects of the coronavirus and the crash in oil prices. Please see our March note for more background on these issues and how they impact the firm.

On April 2, Toronto-Dominion (TD) hosted its annual shareholder meeting (by webcast only).  When asked about the safety of the bank's dividend, TD's CEO Bharat Masrani said there are no plans to change the dividend policy at this time: "We entered this period with considerable strength and strong capital position, and we are in a position, we continue to be in a position, to support the recovery that will follow this crisis we have. I can also tell you that we have no plans to change our dividend policy at this time. We have a strong -- long track record of maintaining a payout to our shareholders, including through the financial crisis, I might add. So as I said, we have no [...]