Christmas Eve, Christmas Ham and Mulled Wine! What could
be a more appropriate moment to go through the notified dividend cuts of my portfolio holdings during
this year.
At the moment, my portfolio contains 47 shares from different companies,
of which 5 have announced dividend cuts or temporary interruption of the
dividend payments. Moreover, if commodity prices remain at that level for a
long time, for me, it shouldn't be a big surprise if some other in my portfolio
companies, announces the same things.
Let's look more closely notifications of these five
companies press releases.
Press Release June 5, 2015 - Baxter International Inc.
Press Release October 28, 2015 - TAL International Group, Inc.
Press Release November 5, 2015 - Prosafe SE
Press Release November 26, 2015 - NCC AB
Press Release December 8, 2015 - Kinder Morgan, Inc.
Let's look next the numbers.
Baxter's and NCC's announcement is not actually a dividend
cut, but I take it as such, because it reduces my dividend income.
As calculation shows, my forward annual dividend income
will decrease by approximately one thousand euros, a percentage decline of
about 6.7%. When I take into account the dividend tax 25.5% my net
dividend income will decrease by around 745 Euros.
As I mentioned above, I wouldn't be very surprised if
similar notifications will come more over the next year related my portfolio
companies like GLNG, OKE and the COP.
On the whole, I am very satisfied with my dividend income in 2015 (I will come back to that later), but I can say that without these few unpleasant news, the next year would have looked a lot better.
Full Disclosure: Still long BAX, BXLT, TAL, PRS, NCC,
KMI, GLNG, OKE, COP
Photo Credit: digitalart/FreeDigitalPhotos.net
Its never a good announcement when companies have to cut dividend. But its a reality and things happen. Im sure we will see more in the commodities sector if the market remains depressed.
ReplyDeleteAnyways...hope you are having a good start to the holidays. Happy Christmas.
cheers
R2R
If oil continues to stay this low then I expect to see more cuts run through the O&G space and I wouldn't be surprised to see more M&A and probably outright bankruptcy from some of the smaller E&P firms. I was disappointed with the BAX/BXLT reduction but the KMI one really hurt. Hoping for a better year in 2016!
ReplyDeleteA nice little round up of the unfortunate part of dividend growth investing. It's just a friendly reminder that no matter how great a company is or was dividend are never guaranteed. I went through cuts myself with GE, WFC and IR. Not fun, but I held on to all those positions. Thanks for sharing.
ReplyDeleteBad news is never good to hear when they are associated with investments but it just proves that it is a part of investing. Great reminder to all that dividend investing does come with risk. This coming year, I am pledging to look deep into a company's dividend history and their ability to continuing paying and/or increasing their dividend before adding them to our portfolio.
ReplyDeleteMerry Christmas to you and yours Dividend Hawk. AFFJ