Oil And Gas Industry Dominate January 2019 Dividend Cuts

The near-real time sources that we track for dividend cut announcements is signaling that something wicked is happening within the U.S. oil and gas industry.

Setting the scene for context, the fourth quarter of 2018 ended with an ominous undertone in an otherwise positive year for dividend paying stocks in the United States:

By far and away, the oil and gas industry saw the greatest amount of distress during the fourth quarter of 2018, accounting for 63% of our sample and coinciding with a significant decline in oil prices during the quarter as global demand diminished. The financial sector, including Real Estate Investment Trusts (REITs), came in second with 17.4% of the dividend cuts in our sample, where the Fed's rate hikes negatively impacted eight of these interest rate-sensitive firms. Food producer and the manufacturing sector each recorded 2 dividend cutting firms each (manufacturing included the highly distressed GE), while the technology, mining, consumer goods and utility industries rounded out our sample with just one dividend cut recorded in each.

Now that January 2019 is nearly complete, we thought it might be worthwhile to check our two main sources for near-real time sample of dividend cut announcements to see how things are faring so far in the first quarter of 2019.

Compared to the first quarter of 2018, we find that the pace of dividend cut announcements is coming in above the level we recorded through the same point of time of the current quarter.

Cumulative Dividend Cuts Announced in U.S. by Day of Quarter, 2018Q1 vs 2019Q1 Year to Date, Snapshot 29 January 2019

 

What really stands out in the underlying data however is that all of the firms in our sample that have declared dividend reductions in January 2019 are in the oil and gas sector of the U.S. economy. Here's the list of firms and links to their announcements.

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