Endangered Dividends List

There have been zero dividend cuts in our Energy and Income Advisor coverage universes since the June 18 issue. That’s a merciful break in what has been non-stop action since early March. But it’s no reason to be complacent about dividend risk in the energy sector.

Just one energy company in our coverage universe has cut its dividend since the May 31 issue of Energy and Income Advisor went to post. Helmerich & Payne’s (NYSE: HP) reduction to 25 cents per share from 71 cents the previous quarter follows what’s been an all-too-familiar pattern for contract drillers and energy services firms this year. As oil and gas producers have reined in drilling activity, cash flows have dropped sharply.

The entire EIA coverage universe has now announced their distributions for calendar Q2. Two more companies reduced their payouts since the previous issue: Halliburton Company (NYSE: HAL) and PBF Logistics LP (NYSE: PBFX).

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.

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.

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.

Not all EIA coverage universe companies have released their Q4 results and updated guidance. That’s largely because of the greater detail required to make annual as opposed to quarterly filings.

GasLog Partners (NYSE: GLOP) will pay a Q4 distribution of 56.1 cents per share on February 21. That’s approximately 2 percent higher than the Q3 payment of 55 cents per share. Then in May, the tanker will slash its payout to a rate of just 12.5 cents a share, a cut of 77.7 percent.

Alliance Resource Partners (NSDQ: ARLP) is cutting its quarterly distribution by roughly -26 percent to 40 cents a unit. That follows management’s release of dismal Q4 results, including declines of -14.8 percent and -28.6 percent in EBITDA, respectively.

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.