As you know, in Marc’s Safety Net column on Wednesdays, he analyzes the dividend safety of companies. And this year, he’s outdone himself…
Below are just some of the companies that Marc analyzed in Safety Net that cut their dividends in 2017 – just as he predicted.
General Electric (NYSE: GE): In early November, Marc warned that GE would likely cut its dividend. According to Marc, “Free cash flow was negative in 2016. This year, Bloomberg forecasts free cash flow to be $10 billion. It will likely pay out $9 billion in dividends. That’s a 90% payout ratio for a company whose results are slipping. That’s too high…” And he was right. On Monday, November 13, the company announced a $4.1 billion cut, the largest in U.S. history outside of the financial crisis. To read Marc’s original article, click here.
Plains All American Pipeline (NYSE: PAA): In March 2016, Marc analyzed Plain All American and determined that its distribution was not safe. At the time, Marc gave the stock an F because it did not generate enough distributable cash flow to cover its dividend. In October, the pipeline slashed its distribution by 45%. To read Marc’s most recent article on Plains All American, click here.
Prospect Capital Corp. (Nasdaq: PSEC): In June, Marc gave this business development company an F. According to Marc, its dividend safety was compromised because of its history of dividend cuts and falling net investment income, a measure of cash flow used by business development companies. In August, it cut its dividend 28%. Click here to read Marc’s most recent analysis of Prospect Capital.
These are just a handful of the companies that slashed their dividends – just as Marc predicted.
Keep in mind, Marc chooses which companies to analyze based entirely on your feedback. So if you have a stock whose dividend safety you’d like Marc to analyze, please leave the ticker symbol in the comments section below.