2017 has been an excellent year for dividend investors as most companies that pay a dividend either maintained their payouts or increased them. No sector or industry witnessed a cyclical downturn due to domestic or global factors that caused its dividend to be cut.
The only industry that was slightly hit was oil & gas refineries during hurricane season down South, while some companies felt the pinch of a stronger dollar. Otherwise, 2017 has been smooth sailing as Trump’s ‘America First’ rally helped the stock market go up. The only dividend cuts observed were from companies that were attempting to do a strategic shift toward a different market or were freeing up cash so they could focus on existing businesses in a more effective way.
As a dividend investor, it’s prudent for you to understand that the dividend policy of every company is governed by its Board of Directors. A company that’s increasing its dividend signifies strong earnings and a positive outlook in the future, while a company that’s decreasing its dividend is having trouble maintaining a strong bottom line or sees a weak outlook in the future.
Dividend.com has a dedicated tool that tracks corporate policies surrounding dividends. You can track the latest dividend initiations, cuts and increases that take place everyday.
Below we take a look at the top 7 companies that decreased their dividends in 2017.
7. Prospect Capital
Prospect (PSEC ) cut its monthly dividend from 8 cents a share to 6 cents a share, which is a 25% cut. The cut was due to “spread compression” as quoted by management. Despite the cut, its share price hasn’t suffered severely this year.
6. Energy Transfer Partners
ETP, the natural gas operator that pays a quarterly dividend, cut its payout from $1.05 per share in February of this year to 54 cents per share in May. Its dividend has since steadily increased to 56 cents per share. As the numbers currently stand, ETP decreased its dividend by 46%. This reduction breaks the company’s streak of 4 consecutive years of dividend increases.
5. General Electric
Conglomerate General Electric (GE ) slashed its quarterly dividend by 50%. Its previous payout was 24 cents per share, while its new payout is 12 cents. The dividend cut is expected to save the company $4 billion in cash annually, which is expected to help the company’s declining free cash flow. As the company focuses on aviation, power and healthcare, it’s looking to exit the rest of its operations.
GE is a Dow 30 stock. There are several Dow 30 stocks that have consecutively increased their dividends for 25+ years. Get the complete list here.
The Best Dividend Stocks List has several companies the size of GE that have increased their dividend and may provide you with a better alternative.
4. Strum, Ruger & Co
RGR (RGR ) pays out a quarterly dividend but is very irregular in nature. The company decreased its dividend twice this year from 48 cents per share in May 2017 to 23 cents per share in August and 21 cents per share again in November. Overall, the dividend has decreased by 56% from its August high.
As the toy maker delivered a third-quarter loss along with declining sales figures, the company cut its quarterly dividend from 38 cents per share to 15 cents per share, which is a 60% reduction. As Mattel (MAT) focuses on its existing brands, it attempts to free up $50 million by this dividend cut.
Get Mattel’s complete dividend-payout history here.
2. OCI Partners
Texas-based OCI Partners (OCIP) produces and sells ammonia and methanol in the U.S.
This chemical company decreased its quarterly dividend twice this year from its high of 23 cents per share back in May to 12 cents per share in August and, finally, to 8 cents per share in November. That’s a total decrease of 65%.
1. Mosaic Company
As the fertilizer market slumps, Mosaic (MOS ) had to cut its quarterly dividend from 15 cents per share to 3 cents per share, which is an 80% reduction. The company expects a gradual improvement in its outlook for the next year, and is, therefore, finding ways to save money.
The Bottom Line
None of the stocks highlighted above are likely to increase their dividends again in 2018. When companies re-strategize and focus their attention on buffing up their cash or are going through a cyclical downturn the way Mosaic is, it usually takes more than a year before they come back to their pre-downturn highs.
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