Endangered Dividends List

EnLink Midstream is cutting its quarterly dividend to 18.75 cents per share starting with the February 13 payment, a roughly 34 percent reduction from the previous 28.3 cents. The company is holding in more cash in response to weaker drilling activity in Oklahoma.

The current EDL features 20 different companies. Four of them are natural resource producers, three Canadian oil and gas and one of them a coal miner. Their primary risk is simply realized selling prices for their products, and their ability to offset pressures with hedging and cost reduction.

Endangered Dividends List companies are vulnerable for various reasons. This is our look at some of the stock most at risk of dividend cuts as we approach the end of 2019.

Ensign Energy Services (TSX: ESI, OTC: ESVIF) was the only company in our EIA coverage universes to announce a dividend cut since the November 1 issue went to post. The Canada-based drilling and services company reduced its quarterly payout by 50 percent to 6 cents a share from the previous rate of 12 cents.

There have been no dividend cuts announced in our energy stock coverage universes since the previous issue of Energy and Income Advisor. Three companies, however, halted what had been consistent quarterly distribution growth.

Dynagas LNG Partners (NYSE: DLNG) has arranged a new $675 million credit facility with lenders to refinance a $470 million term loan and $250 million in senior notes maturing in November. The new debt deal should enable the company to continue its recovery, with six LNG tankers operating under multi-year charters.

Since our previous issue of Energy and Income Advisor, there have been no distribution cuts in our various coverage universes. That’s likely to have changed by mid-October, following the next round of dividend declarations by Endangered Dividends List companies.

In addition to Antero Midstream Corp (NYSE: AM) discussed above, we’re also adding Dynagas LNG Partners (NYSE: DLNG) and Summit Midstream Partners (NYSE: SMLP), less than a year after they came off the EDL following deep dividend cuts.

As we pointed out in our August 14 Energy Commentary “The Hammer Falls on Sanchez: Who’s Next,” Sanchez Midstream Partners (NYSE: SNMP) has eliminated its quarterly dividend. We now believe there’s a better than even chance it may have to follow its general partner Sanchez Energy (OTC: SNECQ) into bankruptcy.

There have been no dividend cuts in our Energy and Income Advisor coverage universe in the brief time since the previous issue went to post. Rather, the majority of EDL members have elected to maintain the same payout rates for at least another quarter.