As a general rule of thumb, when recessionary conditions are present in the U.S. economy, we'll see 25 or more dividend cut announcements during the course of a single month. We're at the halfway point of April 2020, we're barely into earnings season when most companies issue dividend declarations, and we've already tallied 25 from our regular sampling of dividend declaration announcements.
Not that its a surprise to anyone at this point, but here's the chart to confirm the U.S. economy is well into the red zone that corresponds with the U.S. economy experiencing recessionary conditions in 2020-Q2.
Here's the list of firms that have either announced dividend cuts or have suspended their dividend payments:
- Global Net Lease (REIT-Office) (NYSE: GNL)
- Gannett (NYSE: GCI)
- Elmer Bancorp (OTCPK: ELMA)
- Murphy Oil (NYSE: MUR)
- Golar LNG Partners (NASDAQ: GMLP)
- Diversified Healthcare Trust (REIT-Healthcare) (NYSE: DHC)
- Macquarie Infrastructure (NYSE: MIC)
- BP Prudhoe Bay Royalty Trust (NYSE: BPT)
- Herman Miller (NASDAQ: MLHR)
- William H. Sadlier (OTC: SADL)
- Ellington Financial (Mortgage Finance) (NYSE: EFC)
- Plains All American Pipeline (NYSE: PAA)
- Plains GP Holdings (NYSE: PAGP)
- Orchid Island Capital (REIT-Mortgage) (NYSE: ORC)
- CorePoint Lodging (REIT-Hotel) (NYSE: CPLG)
- SM Energy (NYSE: SM)
- American Capital Agency (REIT-Mortgage) (NASDAQ: AGNC)
- Broadmark Realty Capital (REIT-Mortgage) (NYSE: BRMK)
- Genesis Energy (NYSE: GEL)
- Eagle Materials (NYSE: EXP)
- Harvest Capital Credit (NASDAQ: HCAP)
- Mesabi Trust (NYSE: MSB)
- Gladstone Capital (NASDAQ: GLAD)
- Cleveland-Cliffs (NYSE: CLF)
- Eagle Point Credit (NYSE: ECC)
In this list, there are 11 firms that hail from the finance industry, 7 are in the oil and gas sector, there are 2 each in the materials and media sectors of the U.S. economy, and 1 each from the services, mining, and manufacturing industrial sectors. In the following chart, we've broken down the firms we typically group into the finance sector into subcategories, including banks, services (which includes asset management, business credit, etc.), and Real Estate Investment Trusts (REITS) to better visualize where economic distress is concentrated within the overall industry.
If you review the list of firms, you'll find we've also started breaking the REIT sector into subcategories as well. Mortgage REITs (mREITs) and hotel REITs (hREITs) have been hit particularly hard through this point of the coronavirus recession. Since 16 March 2020, no fewer than 35 REITs of all types have either reduced or suspended dividend payments to their shareholders.
References
Seeking Alpha Market Currents Dividend News. [Online Database]. Accessed 15 April 2020.
Wall Street Journal. Dividend Declarations. [Online Database]. Accessed 15 April 2020.
Labels: coronavirus, dividends, recession, stock market
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