Here’s A List Of 5 Companies Ready To Suspend Dividends

The COVID-19 outbreak led to the unprecedented shutdown of a large swath of the global economy. Companies now face the challenges of reduced sales, revenues, and profits. This new reality has a more significant effect on dividend-paying stocks and the investors that own the shares. Companies that don’t pay dividends don’t have to think about it. They can continue not to share the wealth with investors.

Every day since the recent stock market and crude oil price crashes, I see dividend reduction notices cross my screen. Some companies have seen their businesses collapse. An example is EPR Properties (EPR), a REIT that collected just 15% of rent due in April.

Other companies have continued cash flow that is sufficient to support the current dividend but choose to reduce the payouts to conserve cash. This reaction is the result of reduced certainty about the economic future. Plains All American Pipelines LP (PAAis one such company. PAA could continue paying dividends at the 2019 rate but has chosen to reduce the payment to investors by 50%.

Income/dividend-focused investors loathe and fear dividend cuts. The COVID-19 bear market has pushed share values of income stocks down 30%, 50%, and more. The capital losses have investors hoping that the next step will be dividend affirmations and not dividend reductions.

We can use recent dividend cuts as “canaries in the coal mine” to show us which sectors are at the most risk of additional dividend reductions.

Asset and fund management companies are reporting falling assets under management. With the stock market crashing, it is logical that AUM will drop. Since asset management fees are a percentage of AUM, revenues for this business sector will tumble.

On April 23, Invesco, Ltd. (IVZ) announced a 50% dividend cut. Before the reduction, IVZ was priced to yield over 13%.

Here are two more asset management companies that may follow Invesco’s lead.

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Disclaimer: The information contained in this article is neither an offer nor a recommendation to buy or sell any security, options on equities, or cryptocurrency. Investors Alley Corp. and its ...

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