Oil prices plunged as much as 30% last weekend as Saudi Arabia and Russia engaged in a price war that threatens to take market share from higher-cost U.S. shale producers. We analyzed this event in a note here, but the bottom line is that we believe oil prices could now remain at historically weak levels (i.e. $35 per barrel or lower) for at least a few quarters, if not for more than a year. If such an environment persists, then Royal Dutch Shell (RDS.B) seems likely to struggle to both improve its balance sheet and continue its streak of paying uninterrupted dividends as it has since World War II. In light of this development, we are downgrading Shell's Dividend Safety Score [...]

The International Air Transport Association (IATA) now expects the coronavirus to cause the global air transport's 2020 revenue to fall between $63 billion and $113 billion, or as much as 20%.  This is expected to pressure the cash flow of most airlines, which are very sensitive to changes in demand due to their high fixed costs.  While Delta Airlines (DAL) remains one of the strongest operators, we are downgrading the company's Dividend Safety Score from Safe to Borderline Safein order to be conservative and better recognize today's increasingly difficult environment. Many airlines have announced capacity reductions and emergency cost reduction measures to conserve cash during this challenging time. Delta is no exception. On March 10, the company responded to the decline in traffic demand by announcing international [...]

On February 25, we downgraded Carnival's (CCL) Dividend Safety Score to Borderline Safe. Our full note here is worth reading for more background on Carnival's situation, but in our conclusion, we wrote: Cruise demand will take a hit for some period of time, but barring a major setback, Carnival appears to have the financial strength necessary to ride out the storm for a while... With that said, a prolonged slump in cruise demand would sap Carnival's cash flow during a period of peak investment, resulting in poor dividend coverage for several years. While Carnival's long-term outlook would likely remain intact, the high level of uncertainty facing management could cause the dividend to come under pressure out of financial conservatism...Conservative income investors who are comfortable owning [...]

Canadian Imperial Bank of Commerce (CM) CEO Victor Dodig was interviewed by BNN Bloomberg this afternoon and gave a strong vote of confidence to the bank's dividend: We've never cut a dividend since 1868. Our goal is to make sure those dividends are flowing...The Canadian investors that invest in our banks rely on those dividends for income. And every source of reliable income that we can provide Canadians and Americans and our other shareholders that are investing in our banks is incredibly important at this moment in time where cash flow reduces anxiety. Talk is cheap and the worst of the economic slump is likely ahead of us, but Mr. Dodig's comments suggest that Canadian banks and their regulators continue to have [...]