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Cut These Dividend Stocks Before They Cut

Jun. 10, 2020 5:48 PM ETXOM, SPG, OXY, MGM, HOG, BAC, C, GS, VCF, GLW, RCL, VTR, OKE, IRM, JPM767 Comments


  • The stock market has moved largely in tandem with Coronavirus (COVID-19) news since March - down on fear, up on hope (with a slug of Fed Superman largesse).
  • Hopes for a vaccine and a "V" shaped recovery are quickly fading though, as health and Fed officials have been giving a dose of reality.
  • Despite the gloomy economic outlook, the stock market has rallied, giving investors a chance to sell troubled stocks.
  • These stocks are all likely to cut their dividends by next year or sooner.
  • Sell these at-risk stocks now if you care about managing risk.
  • This idea was discussed in more depth with members of my private investing community, Margin of Safety Investing. Get started today »

So far, executives have been trying to hold the line on dividend cuts, but are slowly giving in. As of the end of last week, dividend growth in the S&P 500 has been negative 3% in 2020.

As I talked about in Reopening Too Soon Could Cause Mega-Crash And Depression, the first wave of Coronavirus financial impacts has been bad, but the 2nd wave could be much worse. I am convinced that dozens of companies will throw in the towel and cut dividends rather than continue to raise debt.

Below are several companies that were poised for dividend cuts on any recession coming into 2020. With the mega-recession we are seeing, bordering on a depression, but offset by a massive Fed bailout of the corporate bond market, these companies are still likely to cut dividends by early next year or sooner.

Sell the following dividend stocks before the "biggest suckers rally in history" is kaput and the go full zombie.

Research Summary

I use multiple screens, as a first step, when searching for stocks to buy or sell. Once I've found an interesting company, I do a deeper dive. I have used several screens focusing on financial strength, dividend payout ratios and revenues to identify companies at risk for dividend cuts.

I originally did this exercise early last year when it became apparent from economic indicators the economy was starting to turn over. As I discussed with Margin of Safety Investing members and in recent webinars, I was able to identify nearly 150 S&P 500 companies at risk of dividend cuts in a future recession. That recession is here.

In the following table of S&P 500 dividend paying stocks, you can see the companies ranked by forward dividend growth as measured against their 12 month trailing dividend. Companies such as Occidental Petroleum (

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This article was written by

Kirk Spano profile picture

25+ years of beating markets with less risk. Margin of Safety Investing. "The three most important words in investing are margin of safety." - Warren Buffett 

Get my Macro view and analysis of secular trends which led to my being named "The World's Next Great Investing Columnist" at MarketWatch. Join our investing group to get ETF asset allocation, top growth & dividend stocks, as well as, learn a repeatable approach to option selling for making more retirement income.

I own and operate Bluemound Asset Management, LLC - a boutique registered investment advisory that manages and consults on 9 figures of wealth. I was lucky to have several mentors who managed billions of dollars, including, one who literally helped write the book on option selling. I have now managed money since the 1990s through several major market cycles. 

In the past decade I have worked on private equity led real estate projects, as well as, consulted to several private equity firms, hedge funds and family offices. I currently actively help accredited investors find sustainable real estate investments through private equity. 

Since 2011, I have been widely syndicated and appear as an investing expert in the media. Follow my work, as I try to help you make great returns with less risk.

Analyst’s 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 (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

On Friday mornings I hold a free macro and investment webinar for Seeking Alpha readers. See my blog for details. --- I own a Registered Investment, but publish separately from that entity for DIY investors. Any information, opinions, research or thoughts presented are not specific advice as I do not have full knowledge of your circumstances. All investors ought to take special care to consider risk, as all investments carry the potential for loss. Consulting an investment advisor might be in your best interest before proceeding on any trade or investment.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (767)

Just for the record: Exxon $XOM declared another dividend $0.87 per share yesterday. this will be the 4th straight dividend (never cut) from the time of writing this article. one would have missed out on 4 dividends and capital appreciation if one would have listened to the advice in this article.
@ihookem - you wrote "It goes to show how hard it is to tell what stocks to buy and what to sell." ---- Wrong. It shows how easy it is to write articles and how there is no accountability for being horribly wrong. On SA i am sure if an audit were done will reveal that many authors (not necessarily this one) made more money by writing articles and page clicks than their actual stock picks...
@Park1000 , This author made out well.
12 Jun. 2021
I have made $140%% . I bought most $67.00 This is a stock headed to $160 -
@choate , What stock?
Donggle profile picture
Fundamentals mean nothing anymore. Robinhood has showed its only the bigger fool theory! Its easier to ride the horse in the direction its going!
@Donggle , That will all change during the next real bear market!
This author's opinions have been a phenomenal contradictory indicator. Just do the opposite...I for one am looking forward to his next article..
@Park1000 Indeed. I make far more money by doing the opposite than following his recommendations as a (former) subscriber. One just has to look at his comments on oil when it was capitulating in March 2020; XOP has tripled since. Oh, and then his sell on SPG in June 2020 which has almost doubled since and just had a dividend increase. Oh, and how about selling ENPH in July 2020, which has tripled since. Oh, and then his comment about ROKU in one of his rambling webinars in January 2019 stating that they had too much competition; that's up 10-fold. Park100, I am with you!
GameBuzz profile picture
@Park1000 In all fairness, did he do a follow up on buying them back? Many in the banking sector have gone on to new highs.
@mro514 , He made a lot of money on OXY during the previous oil bull !
It goes to show how hard it is to tell what stocks to buy and what to sell. Take an equal weight of all those stocks and you would have done very well. I have XOM and kept it. Maybe i should sell, but as of now, energy seems to like it will do very well. I sold my VTR @ %49 and $53 about 4 months ago and dont regret it. It crashes much more than the market in a downturn , and for 3.5% divies , it isnt worth it. I am mostly done picking stocks and selling them too. Almost every time I sell a stock, I regret it. I sold 60% of my T 2 weeks ago for WPC, O, SPYD and dont regret it and likely wont, and will likely sell the rest . Most times however, I loose money when I jump from one stock to the next and then pay the bandits in Madison 4% tax on the gains. I dont make enough to pay federal taxes on divies or capital gains though. I am sure I would have done better with a S&P 500 equal weight ( RSP) , my midcap VOE, and a few other bonds than picking stocks.
@ihookem , Good luck and thanks for sharing.
08 Mar. 2021
WOW. Almost every stock that was mentioned is on a tear. Who would of thought!?!? Glad I held onto and bought more of my banks, oil companies including the servicing companies and IRM.

I gotta admit that im loving this tech selloff. All these clowns thinking their TDOC,PYPL, NVDA would never drop. Thats not how markets work. With that said it is getting close to the time to start thinking about selling the banks and oil and rotating that money into these cheaper high growth tech companies.
@CB91 , Yes, there has been a lot of rotation!
$XOM closed above $60 yesterday and maintained full dividend... Actually $XOM has massively outperformed S&P 500 index this year.. Like I said earlier, hopefully No One took your investment advice including yourself....
Bossco profile picture
@Park1000 Marvelous short term return for XOM after its all too well deserved plunge to the depths. Now back to [just] $60, where they were in 2010. Though XOM net Income & Net Margin, Levered Free Cash Flow, Return on Total Capital and Divy Payout Ratio, etc., etc. all the worst vs their peers. Glad I saw the handwriting on the walls and sold all XOM back at $70 and remained with my favored CVX that held up deservedly quite a bit better and continues to have better fundamentals.
@Bossco , You mean XOM doubled recently from $30 to $60?
Kirk Spano profile picture
@kimbillro is it really that hard to understand this chart. $XOM is junk on a rally. www.tradingview.com/...
Guy at Work reading SA profile picture

So far the 2 stocks I own that you said would cut are still paying me those dividends. Glad I didn't listen to that bad advice xD


@Guy at Work reading SA , It looks like it is working for you.

Kirk Spano profile picture

@Guy at Work reading SA Sometimes the Fed has your back, sometimes they don't. Zombies eventually die ugly deaths.


@Kirk Spano , They can die just like vampires, with a wooden stake.

If I would have been so Spectacularly wrong in advising other people with their money, I would not have been able to sleep at night and become a hermit. What do you do Sir Mr. Author ?
AEGISBMD profile picture

Yeah...his XOM statement missed by about 100%. XOM now at ~$50/share.
chippos profile picture
@Park1000 Are there any authors on SA that score more then 50% ?
@AEGISBMD @Kirk XOM closed above $52 today and will pay a quarterly dividend of 87 cents per share pre market tomorrow...
TJ Burke profile picture
Turns out this whole article was a largely contrarian indicator.
Pickwick's Value Club profile picture
@TJ Burke if you followed this author and many others alike on SA, you would have been in 90% cash since late April until YE lol.
Kirk Spano profile picture
@Pickwick's Value Club or bought GDX on March 16 live on air at during the lowest hour of the year and doubled your money on 16% of your portfolio, then cherry picked along the way. Or that.

Blows my mind people talk up the average stocks on this list. Most have underperformed the market. Why bother with them?
GameBuzz profile picture
@TJ Burke Yeah, that table is painful now.
Brad Kenagy profile picture
@Kirk Spano

News out today that Corning (GLW) is increasing their dividend 9.00% where you projected a cut in Q4. Turns out my reading of the numbers was correct :)

Add VLO to the list
Donggle profile picture
This is the 2008 moment for many who hoped to retire in 10yrs. Wonder how it will turn out? Seems like too many of these financial schemes in various sector flavors. The deleveraging of American will begin. Best thing to do, do not quit your day job.
Prof Ed Re profile picture
@Donggle You are right this is a 2008 moment. Those that did nothing and hung in their (like me) made out like a bandit. Also "Don't quit day job" is excellent advice.
Kirk Spano profile picture
the problem with the "hang in there" idea is that it delays retirement by 5-10 years and we have finite time on this planet. Being defensive a few times per decades pays off. You don't have to be a day or swing trader to manage asset allocation. Right now, everyone should be at the conservative edge of whatever their long-term strategic asset allocation range is.

At Margin of Safety Investing we have 3 risk tolerance categories for our Plug & Play Portfolio Models:

Defensive, Cautiously Optimistic and Pedal to the Mettle.

Defensive natured folks ought to be 50-75% cash imo. Not for long, but until the next 20% plus correction.

Cautiously Optimistic (most folks) 25-50% cash.

Pedal to the Mettle (which includes a lot of swing traders) about 15% cash.

Those who hung on through 2008 into early 2009 took 3 years to get back to even. And took until 2019 to have doubled their money from 2007. That's a 6% per year return. An awful lot of risk for 6%. Could have locked in bonds to do that.
Donggle profile picture
@Prof Ed Re I hung in there, good jobs peak earning years. Some darlings, do not come back, like fertilizer stocks, etc. Seems like this time no easy fixes to do, cant lower rates to stimulate the economy, unemployment to stay high. Think the service economy has finally caught up to us, when it is just people to people. Gig jobs are not sustainable. America first is a lonely position in the world.
Jonathan Loewer profile picture
Wells Fargo $WFC just cut the dividend by 80% this morning. A number of people asked why WFC was not in this article (Mr. Spano explained why he left it off), but it definitely is a perfect example of "cut the stock before they cut the dividend". However, now, just above its 52-week low, it could be a good long-term buy, but I would be patient and wait for another down-day or two, and wait until the post-earnings crash has settled out, and then see if I couldn't get shares a little cheaper at the bottom.
Kirk Spano profile picture
@Jonathan Loewer right, as I said, the stock had already fallen pretty far. The chart we've been working form a for a while is linked. I've projected a price around $20 on WFC for over a year now. Will it get there? Hard to know, but that's the bottom of our buy zone for what we expected a while ago.
I like your POV. 20$ is too cheap and conservative estimate for $SPG in this free money world but I would say new lows in 40s or below is a buy zone for growth investors who want to enjoy dividends down the road.
What did SPG close at today @Sekhar01246 ?
Kirk Spano profile picture
I understand what you are saying. If you take the time to look at the property array and listen to Simon, it's clear he knows the task at hand in redevelopment. Not only do they have to spend a lot of money again, but they have to get it right this time. I think the smart move is to find corporations to put offices at one end of most of these malls and create shared mini corporate campuses. High ceilings, services on site without have to do it themselves. I don't know what the buy price is, looks like 20s to me is rock bottom due to value of real estate and my guess that they sell some to deleverage. But, it's a process. Have to consider the actual values and on things this big, and in transition, it's tough.
Mountain Marmot profile picture
Agreed. Also possible, blended residential/commercial. Could be senior and/or assisted living with amenities to walk to.
There's a silver lining somewhere in this chaos.
Invader from Earth profile picture
So, how often have we seen cut the stockholder dividend while at the same time bonuses, benefits, pensions, golden parachutes, salaries get sweeten. “Where will the money come from? Oh yeah! The owners! That’s us! BODs should NOT include company officers or fully paid chairs....
Unfortunately @Irredeemable Deplorable , BODs are composed of them.
Kirk Spano profile picture
yep @kimbillro said, BODs are packed with cronies
Emerald profile picture
@Kirk Spano, a profound understatement!
Kirk Spano profile picture
I believe every stock listed here is down the past 2 weeks with quite a few double digits (far more than the dividends). Two could get oversold to the point where I sell cash-secured puts on them or buy outright. I am telling members to Margin of Safety Investing which 2 next week.
Here's another one to worry about. Brookfield Property Reit. BPYU. It only collected 20% of rent in April. I own the preferred which has continued to drop and is now about $17 and change. The company did not comment on its May rent collection. I am worried that it will cut its common dividend and suspend its preferred dividend. Does anyone have any thoughts?
They would be smart to cut the dividends and save cash @Fundflow .

I believe if Brookfield were to cut dividend it would be for their common stock. Albeit I don't see a full suspension of dividend.

Keep in mind that BPY is supported by Brookfield Asset Management ... holding company has something like $60 billion in cash/available credit to be drawn.

BAM bought General Growth for a reason and I don't perceive them wanting to let those assets fail.

A capital injection into the company will likely occur to preserve assets if things get rough.
@gmoney101 I decided to get out of the preferred. It keeps dropping every day. The last news I saw was that rent coverage for the REIT itself was 20%. I matched the loss against some gains I took. I just wanted to de-risk. The REIT has not published statistics on May rent coverage. I would rather not worry about a possible suspension. Just my two cents.
GameBuzz profile picture
I sold XOM at 70 and after a brief dip, watched it hit 75 and had seller’s remorse, which has now morphed into seller’s relief!
Stocks will fluctuate @GameBuzz .
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