Endangered Dividends

The outlook is much brighter for this utility's foray into solar, and for one of our closed-end funds. Unfortunately, other companies still face serious challenges.

Four of the holdings in our Endangered Dividends List still have potential upside, but a questionable acquisition by one propane distributor rates a sell call.

Half a dozen European utilities and telecoms cut dividends in March. The happy count from April: Zero. Several companies this month even graduated from the Endangered Dividends List.

Soft economic growth and dysfunctional regulation have brought payout cuts for five European power, telecom and water providers. And all but one signal further reductions in the next 12 to 18 months.

TransAlta Corp (TSX: TA, NYSE: TAC) has cut its quarterly dividend by 37.9 percent to 18 cents Canadian, starting with the April 1 payment. The new level is low enough to maintain at least the next couple years. As a result, I’m removing the company from the Endangered Dividends List.

Nothing destroys shareholder value like a dividend cut. Investors should steer clear of these names.

These utilities could be due for a dividend cut. 

PVR Partners (NYSE: PVR) earns an exit from my Endangered Dividends List this month. The catalyst was not third quarter earnings results, but the acquisition by Regency Energy Partners (NYSE: RGP) for 1.02 Regency units and a cash payment to be determined at close in first quarter 2014.

RWE AG (Germany: RWE, OTC: RWEOY) plans to cut its 2014 annual dividend (payable April 17) to one euro, from a previous rate of 2 euros. That’s the third dramatic cut in five years for the German power giant. And it may not be the last, given some uniquely challenging conditions.

Stocks around the globe are running into trouble in this slowing economic environment, It's been especially tough on companies that rely on emerging markets for their growth.