On September 26, Imperial Brands (IMBBY) lowered its guidance for the year due to challenging conditions in the U.S. vapor market. One week later, Imperial's CEO Alison Cooper stepped down after leading the company since 2010. Ms. Cooper had spearheaded Imperial's push into the vaping category. As a result of these developments, which seem likely to pressure the firm's deleveraging efforts and need to invest in next-generation products (NGP), we are downgrading Imperial's Dividend Safety Score from Borderline Safe to Unsafe. An Unsafe score does not mean a dividend cut is imminent. After all, Imperial's payout is still technically covered by the company's cash flow.

The first Starbucks (SBUX) cafe opened in 1971, and the company has since grown to become the world’s largest coffee purveyor with over 29,000 stores in 78 countries. Starbucks stores sell not just premium coffee but also tea, packaged coffee, juices, bottled water, pastries, and various lunch items. In addition, the company licenses several of its products, which are available in supermarkets and stores, and sells through other up-and-coming brands such as Teavana, Tazo, Seattle’s Best Coffee, Evolution Fresh, and Ethos. In its most recent fiscal year, the vast majority of Starbucks' sales (80%) came from the company’s namesake, company-owned stores. Licensed stores and consumer packaged goods generated 11% and 9% of revenue, respectively.

Walt Disney founded his namesake company in 1923. Since then, the business has gone on to become one of the most iconic brands ever created. Today, Walt Disney (DIS) is a leading entertainment company with $65 billion in revenue.  The media conglomerate is highly diversified and vertically integrated with four business segments that complement one another: Media Networks (38% of sales, 47% of profits): TV programming (ABC TV and cable channels like A&E, History, Lifetime and ABC Family, ESPN network), radio, and television stations. In total, the company has about 100 Disney-branded television channels that are broadcast in 34 languages and 164 countries.

Founded in 1940, McDonald's (MCD) is the world's largest quick-serve restaurant chain, with over 38,000 locations in more than 100 countries. Almost all of its restaurants are franchised, meaning the stores are owned and operated by independent business owners. Under a typical franchise arrangement, McDonald's owns or leases the property while the franchisee pays for equipment, signs, seating, and décor.McDonald's ownership of real estate, combined with the co-investment by franchisees, enables the company to achieve restaurant performance levels that are among the highest in the industry. Franchisees are responsible for reinvesting capital in their businesses over time, but McDonald's frequently co-invests with them to help improve their restaurants and operating systems to maintain the company's brand value.