Endangered Dividends
Another Wave of Dividend Cuts
By
Roger S. Conrad on
Mar. 9, 2019
Talk about getting egg on your face: Not one but two of the high yielding companies from last month’s Feature article announced dividend cuts in the past month. The good news is both were already on the Endangered Dividends List and had priced in cuts, so additional downside has been limited.
No New Cuts, Some New Risks
By
Roger S. Conrad on
Feb. 11, 2019
Dominion Midstream has merged into its general partner Dominion Energy (NYSE: D). Unitholders by now should have received 0.2492 shares of D per DM unit. Factoring in Dominion Energy’s 10 percent dividend increase and a final partnership distribution of 36.9 cents per unit paid last month, Midstream unitholders will receive approximately -6.5 percent less in 2019 distributions than they did in 2018.
Fewer Dividend Cuts Ahead for 2019
By
Roger S. Conrad on
Jan. 14, 2019
Last year, 20 Utility Report Card coverage universe members cut dividends at least one time. That’s a fraction of the 126 that raised payouts, including all the Conservative Holdings and Top 10 DRIPs. But it’s more than we’ve seen since the 2008-09 Bear Market.
Now for some good news: Even if the global economy does slow this year, most essential services companies have adjusted enough to maintain their current payouts the next 12 months.
That should even include most current members of the Endangered Dividends List, despite the weaknesses that landed them there. See this issue’s URC comments for complete analysis of how the coverage universe measures up on our five quality criteria: Payout sustainability, revenue reliability, regulator relations, refinancing risk and operating efficiency.
Approaching Dividend Cuts Will Bring Clarity
By
Roger S. Conrad on
Dec. 10, 2018
Dominion Energy (NYSE: D) reached a “definitive merger agreement” to buy out minority unitholders in its Dominion Midstream Partners (NYSE: DM) affiliate.
The final terms reduce the effective distribution cut in the first year of the deal to a bit less than 15 percent. That includes the additional distribution payment of 36.9 cents and Dominion Energy’s expected 10 percent dividend increase in January.
Cutting Dividends to Avoid Capital Markets
By
Roger S. Conrad on
Nov. 11, 2018
Buckeye Partners (NYSE: BPL) has cut its distribution for the first time in its 30-year plus history: A -40.6 percent reduction spot on with our expectation.
The move saves $300 million. That will fund modest capital spending without issuing new equity and make it easier to refinance the hefty $925 million in debt maturing through 2019.
Dividend Cuts Caused by Mergers Can Raise Returns
By
Roger S. Conrad on
Oct. 9, 2018
Last month, Dominion Energy (NYSE: D) announced it’s buying the 39 percent of Dominion Midstream (NYSE: DM) it doesn’t already own.
In the September 19 Alert, we noted the offer of 0.2468 D shares per partnership unit equates to a roughly 41 percent distribution cut. We also said Dominion will have to increase that closer to the initial public offering price of $21 per unit to succeed.
Dividend Cuts: Good News and Bad news
By
Roger S. Conrad on
Sep. 9, 2018
First the good news: Four companies earned an exit from the Endangered Dividends List this month without cutting payouts.
CenturyLink (NYSE: CTL) is off after a stock and bond rally following turnaround second quarter results. That eases cost of capital pressures on the dividend and merits a boost in our buy target.
Merging to Cut Distributions
By
Roger S. Conrad on
Aug. 11, 2018
Enbridge Inc (TSX: ENB, NYSE: ENB) management isn’t budging from take under offers for its US MLP affiliates Enbridge Energy Partners (NYSE: EEP) and Spectra Energy Partners (NYSE: SEP). That boosts the odds the proposed stock-for-stock exchange ratio will hold, along with distribution cuts of 40 percent for Enbridge and 10 percent for Spectra.
SCANA Cuts, Who’s Next?
By
Roger S. Conrad on
Jul. 3, 2018
SCANA Corp (NYSE: SCG) will cut its quarterly dividend to 12.37 cents a share starting with the July 18 payment. The -79.8 percent reduction is in response to the South Carolina state legislature, which last week passed a bill reducing the 18 percent rate hike to pay for the cancelled Summer nuclear plant to 3.2 percent.
Enbridge Eats Its Young
By
Roger S. Conrad on
Jun. 11, 2018
Enbridge Inc (TSX: ENB, NYSE: ENB) is buying the remaining common units of the two US MLPs it controls: Enbridge Energy Partners (NYSE: EEP) and Spectra Energy Partners (NYSE: SEP).
It’s a good deal for the acquirer, which is buying these assets for barely 7 times cash flow. Absorbing the regulated natural gas and oil pipelines should dodge a possible Federal Energy Regulatory Commission-mandated rate cut. And management has affirmed three-year earnings guidance while promising faster growth after 2020.
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Endangered Dividends List
Warning: Falling Dividends.
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