A Different And Longer List For Dividend Cuts Than A Year Ago

by: Ironman at Political Calculations

We're delaying our weekly look at the S&P 500's performance in the previous week by a day because some time later today, we'll get our first look at what the expectations for dividends are for the first quarter of 2017.

So as we're stalling for time, we thought it might be interesting to update our chart showing the cumulative number of U.S. firms that have announced ordinary dividend cuts during the current quarter of 2016-Q1 through Friday, 18 March 2016, which we'll compare to the year ago quarter of 2015-Q1.

Click to enlarge

Since the last time we updated this chart at the beginning of March 2016, we see that U.S. firms in 2016-Q1 continue to be following a more distressful path than did U.S. firms in 2015-Q1, which itself was the worst quarter for dividend cuts in all of 2015.

Moreover, we see that the main difference between the quarters has set in since Day 50 (19 February 2016) of the current quarter. We thought it might be interesting to see which firms have announced dividend cuts in the past month - our results are presented in the table below.

Publicly Traded U.S. Companies Cutting Dividends Since 19 February 2016

Date

Company

Symbol

Old Dividends per Share

New Dividends per Share

Percent Change

19-Feb-2016

Yamana Gold

AUY

$0.01500

$0.00500

-66.7%

19-Feb-2016

GAMCO Investors CL A

GBL

$0.07000

$0.02000

-71.4%

22-Feb-2016

Cross Timbers Royalty Trust

CRT

$0.16870

$0.07202

-57.3%

22-Feb-2016

Enduro Royalty Trust

NDRO

$0.02984

$0.02431

-18.5%

22-Feb-2016

Magic Software

MGIC

$0.09500

$0.09000

-5.3%

22-Feb-2016

Enerplus Corp

ERF

$0.03000

$0.01000

-66.7%

22-Feb-2016

First Potomac Realty Trust

FPO

$0.60000

$0.40000

-33.3%

22-Feb-2016

Mesa Royalty Trust

MTR

$0.04607

$0.02375

-48.4%

23-Feb-2016

Cimarex Energy

XEC

$0.10600

$0.08000

-24.5%

23-Feb-2016

Extended Stay America

STAY

$0.19000

$0.17000

-10.5%

24-Feb-2016

Tronox

TROX

$0.25000

$0.04500

-82.0%

25-Feb-2016

Newtek Business Services

NEWT

$0.40000

$0.35000

-12.5%

25-Feb-2016

Northstar Realty Finance Corp

NRF

$0.75000

$0.40000

-46.7%

25-Feb-2016

Gulf Island Fabrication

GIFI

$0.10000

$0.01000

-90.0%

25-Feb-2016

PHX Energy Services

PHXHF

$0.00700

$0.00000

-100.0%

26-Feb-2016

Acacia Research

ACTG

$0.12500

$0.00000

-100.0%

29-Feb-2016

Gramercy Property Trust

GPT

$0.12850

$0.11000

-13.7%

29-Feb-2016

NRG Energy

NRG

$0.14500

$0.03000

-79.3%

29-Feb-2016

Range Resources

RRC

$0.04000

$0.02000

-50.0%

29-Feb-2016

Golar LNG

GLNG

$0.45000

$0.05000

-88.9%

1-Mar-2016

Tesco

TESO

$0.05800

$0.00000

-100.0%

1-Mar-2016

Global Ship Lease

GSL

$0.10000

$0.00000

-100.0%

1-Mar-2016

CONSOL Energy

CNX

$0.01000

$0.00000

-100.0%

3-Mar-2016

BAB

BABB

$0.03000

$0.01000

-66.7%

3-Mar-2016

Ampco-Pittsburgh

AP

$0.18000

$0.09000

-50.0%

11-Mar-2016

Equity Residential

EQR

$0.55250

$0.50375

-8.8%

11-Mar-2016

Federal Agricultural Mortgage Corporation - Correction - original report was incorrect

AGM-A

$0.16000

$0.26000

+62.5%

15-Mar-2016

Elmer Bancorp

ELMA

$0.33000

$0.30000

-9.1%

15-Mar-2016

Two Harbors Investment

TWO

$0.26000

$0.23000

-11.5%

15-Mar-2016

OHA Investment

OHAI

$0.12000

$0.06000

-50.0%

16-Mar-2016

Conrad Industries

CNRD

$0.25000

$0.10000

-60.0%

16-Mar-2016

OCI Partners

OCIP

$0.41000

$0.32000

-22.0%

17-Mar-2016

Dynex Capital

DX

$0.24000

$0.21000

-12.5%

Click to enlarge

Sharp-eyed readers comparing this listing to our previous version will note that we have adjusted the size of the dividend cut shown for Gramercy Property Trust (NYSE:GPT), as we later found that the amount of the firm's previously reported dividend cut was really an artifact of its reverse merger with Chambers Street Properties (NYSE:CSG), which affected the number of outstanding shares.

Looking over the list of 33 (actually 32 after correcting AGM-A) dividend cutting firms, we find that 9 are in the oil industry (27.3%), 6 are Real Estate Investment Trusts (18.2%) and 5 are in the finance sector (15.2%), which together account for nearly 61% of all dividend cuts that we have been able to identify from our news sources in the month since 19 February 2016. Of the remainder, 3 are mining firms (9.1%), there are 2 each for technology, shipping, and manufacturing firms (18.3%) and 1 each for the hotel, chemical, utility, and restaurant industries.

By comparison, our news sources identify 22 firms that announced they would reduce their dividends between 19 February 2015 and 18 March 2015. Of these dividend cutting firms from a year ago, 10 were in the oil and gas industry (45.5%), 4 were in the finance sector (18.2%) and 3 were REITs (13.6%). There were 1 each for firms representing the technology, shipping, mining, aerospace, and materials industries.

It's quite a different, and longer, list.

Data Sources

Seeking Alpha Market Currents Dividend News. [Online Database]. Accessed 18 March 2016.

Wall Street Journal. Dividend Declarations. [Online Database]. Accessed 18 March 2016.

Notes

Some readers have remarked that our previous listings of firms that have announced dividend cuts include firms that pay variable distributions rather than set dividends. To be honest, that's a distinction without much of a meaningful difference where dividend cut announcements are involved. When times are good, such firms automatically distribute increasing dividend payments to their shareholders and when times are bad, they automatically reduce those payments. They are simply more responsive to the economic conditions that exist in their markets.

As such, since dividends are the primary fundamental driver of stock prices, the stock prices of these firms will tend to be more volatile than firms that more firmly fix the expectations for their future dividend payments.

That factor is a big reason for the relative stability of U.S. stock prices as compared to Chinese stock prices. Chinese firms tend to set their dividend payments as a simple percentage of their earnings while U.S. firms tend to set them independently of their earnings.

Which is why U.S. stock market earnings can crash without necessarily taking stock prices down with them as would seem to be predicted by such metrics as Shiller's CAPE Ratio. China's government-directed financial institutions could have spent a heck of a lot less money to prop up that nation's stock markets by simply having Chinese firms set their dividends independently of their earnings and underwriting those payments to investors instead of the outright stock purchases they chose to make instead.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.