Dividend.com analyzes the search patterns of our visitors each week. By sharing these trends with our readers, we hope to provide insights into what the financial world is concerned about and how to position your portfolio.
Amid heightened uncertainty in global markets, investors are favoring blue-chip stocks. Iconic drinks maker Coca-Cola is first in the list, while telecom company AT&T is fourth. In the middle of these consumer heavyweights, we have pipeline operator Energy Transfer and real estate company AG Mortgage Investment Trust.
Don’t forget to read our previous edition of trends here.
Coca-Cola (KO) shares the first spot in the list with AG Mortgage Trust, both with a rise in viewership of 5%.
The effect of the coronavirus pandemic on Coke has been mixed, as the company’s sales to households increased but sales to restaurants and other entertainment venues almost ground to a halt. In April, sales volumes were down around 20%, according to the company, and slightly improved in May, but still down compared to last year. The dramatic fall in sales to restaurants was somewhat offset by consumers stockpiling products.
Shares in Coke remain down 16% since the start of the year, underperforming the S&P 500 Index, which is down 3.3% over the same period.
However, Coke is well positioned to withstand the crisis thanks to a healthy balance sheet and strong free cash flow generation. The company’s strategy of moving into new product categories such as coffee is likely to pay off in the future as consumers shift to healthier alternatives.
Coca-Cola declared a $0.41 per share quarterly dividend, amounting to an annualized yield of 3.60%. The dividend is payable July 1.
Use the Dividend Screener to find high-quality dividend stocks based upon 16 parameters. Stocks with the highest Dividend.com Rating are the current recommendations to investors.
AG Mortgage Trust
AG Mortgage Investment Trust (MITT) has seen its viewership advance 5% as the hybrid mortgage trust saw its shares pummelled in the aftermath of the coronavirus outbreak.
On June 12, AG reported a massive loss for the first quarter of $15 per share, leaving the company with a book value of $2.63 per share. The company’s portfolio of assets shrank from $4.4 billion to $1.6 billion, and CEO David Roberts said he expects asset sales to boost liquidity. As of May 31, the company had around $45 million in cash.
The dire situation has forced the company to cancel its dividend on both common and preferred shares for the foreseeable future.
Shares in AG have shed 65% since the start of the year, but they still trade at around 200% of book value.
Check out our latest Best Dividend Stocks List here.
Energy Transfer (ET) has taken third place in the list with a tepid rise in viewership of 2%. The pipeline operator has been hit by a collapse in oil prices and the resulting fall in supply, although a recent deal between OPEC+ members should instill renewed confidence in oil markets.
Energy Transfer, which operates 90,000 miles of oil and gas pipelines, was forced to cut costs by reducing capital investments and cutting 6% of its workforce in a bid to preserve cash. In early May, the company said it will slash capital expenses by $650 million in 2020 and possibly another $400 million in project spending.
As many shale oil operators have shut wells because they are uneconomic, demand for transportation has declined. Oil production is expected to drop by as much as 2 million barrels per day, from nearly 13 million barrels before the pandemic.
Shares in Energy Transfer have declined more than 35% since the start of the year. As such, the company’s dividend is now yielding an astounding 15%. The company said its free cash generation was very strong and it covered the dividend 1.72 times.
AT&T (T) closes the list with an advance in viewership of 1%. The telecommunications and media conglomerate recently made headlines with news that it is looking to sell its Warner Bros. video game unit in a deal that could fetch up to $4 billion.
The company is facing pressure from activist investor Elliott Management to streamline its businesses, particularly after it made two large debt-fueled acquisitions of DirecTV and Warner Bros., the owner of HBO.
Among the interested parties in AT&T’s gaming unit are Activision Blizzard, Electronic Arts, and Take-Two Interactive Software.
Given its high debt load, AT&T is also looking to cut costs through layoffs at its stores, which were impacted by the coronavirus pandemic.
The Bottom Line
Coca-Cola suffered from the closure of restaurants, bars, and other entertainment venues, but its long-term prospects seem bright. AG Mortgage Trust nixed its dividend after posting a huge loss. Energy Transfer was hit by the collapse in oil and gas prices, but it’s likely to emerge strong over the long term. Finally, AT&T is looking to sell assets and cut costs to streamline its business and reduce its huge debt load.
Be sure to check out Dividend.com’s News section for next week’s Market Wrap and other great dividend investing news.