Endangered Dividends List
COVID-19 fallout has aggravated all of the Endangered Dividends List critical factors at multiple companies. As a result, distribution cuts across the energy spectrum have continued at a rapid pace, with 11 more companies reducing their payouts since the previous issue of EIA.
Endangered Dividends List
Since the previous issue of EIA, distribution cutting activity has accelerated, with 19 companies cutting their payouts. We highlighted Schlumberger Ltd in the previous section. Below we review the rest of the cutters.
More Pain Ahead for Smaller Midstream
It’s been a week since the most recent issue of Energy and Income Advisor went to post. And already 15 more energy companies have announced distribution cuts, stretching from wellhead to burner tip.
Kinder’s Dividend Decision: Prudence, Not Weakness
Back in 2017, financially recovering Kinder Morgan Inc (NYSE: KMI) promised investors three dividend increases. But this week, it offered up a 5 percent lift for 2020, just 20 percent of what was promised. Under normal conditions, I’d view a shortfall like this as a potential warning of underlying business weakness – here’s why in this case, it’s not.
Energy Stocks Off Their Lows, Now What?
It’s still very early days to actually call it a trend. But for at least the last month, energy stocks are actually outperforming oil and gas prices.
That may be temporary. But at least for now, it’s a sharp break from the rule of the past several years. Since oil broke under $100 a barrel back in mid-2014, energy stocks have consistently lagged when oil has jumped. And when the price of the commodity has slipped, they’ve fallen much further and faster.
As a result, energy stocks have finished every mini-cycle of the past six years at lower levels. ExxonMobil’s (NYSE: XOM) March 31 bottom price of $30 and change is its lowest point since 2002.
Endangered Dividends List
Since the previous issue of EIA, six coverage universe members have announced distributions cuts. By the end of the month, 31 companies currently on our Endangered Dividends List will declare dividends. And we expect to see a sizeable number of them either cut or eliminate payouts in response to the recent drop in oil prices.
Endangered Dividends List
Eight companies in our coverage universe have announced distribution cuts since the previous issue of EIA. We expect to see at least a like number by the time the next issue goes to post, as more management teams adjust guidance to sub-$30 per barrel oil. And we’ve accordingly added to the table, which now lists 39 companies from our coverage universes.
Portfolio: Another Look at Energy Bonds
In the March 25 Energy Commentary “Energy Bonds are Ripe Again,” we highlighted an emerging fixed income opportunity in bonds of battered energy companies up and down the value chain.
Energy Bonds Are Ripe Again
Nothing incites investor panic like a fast-falling safe haven. But the Federal Reserve’s Monday announcement abruptly calmed what had been a growing rout in corporate as well as municipal debt. What’s left now is a massive supply of bonds with the highest yields since 2008.
Endangered Dividends List
Many companies have cut dividends since the previous issue of EIA. The sharp drop in the price of Western Canada Select (WCS) oil was the primary catalyst for cuts at ARC, Bonterra, Crescent Point, Vermilion and Whitecap.
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Elliott and Roger on Mar. 25, 2021
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Experts
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Elliott H. Gue
Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor
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Roger S. Conrad
Founder and Chief Analyst: Capitalist Times and Energy & Income Advisor