98% of Dividend Cuts Caught in Advance

Crescent Point Energy Group (CPG) cut its dividend by 89% due to the significant decline in the price of oil. The Canadian oil producer's payout ratio sat near 100%, its debt load was high, and management desired more financial flexibility.

Nabors Industries (NBR), a provider of drilling services and technologies for oil and gas wells, slashed its dividend by 83%. With the price of oil significantly declining, Nabors was losing money and needed to free up more cash to reduce its debt load.

As a mortgage REIT, Anworth Mortgage (ANH) generates income primarily based on the difference between the yield on its long-term mortgage assets and the cost of its short-term borrowings. The flattening yield curve pressured the firm's earnings and kept its payout ratio above 100%, so Anworth reduced its dividend by 7%.

Capstead Mortgage's (CMO) earnings remained under pressure due to the flattening yield curve, which reduces the income generated by the adjustable-rate mortgage securities it invests in. With a payout ratio in excess of 100%, the mortgage REIT lowered its dividend by 27%.

AltaGas (ATGFF) cut its dividend by 56%. The owner of regulated utilities and midstream assets needed to direct more cash flow towards deleveraging efforts after taking on significant debt to acquire a natural gas utility for $9 billion. With midstream stock prices in a bear market, issuing equity was no longer a viable financing plan for the firm.

Communications Systems (JCS), a provider of connectivity products for broadband and voice communications, cut its dividend by 50%. The money-losing firm needed to restructure its operations and direct more capital to its best growth opportunities.

Ellington Residential Mortgage REIT (EARN) lowered its dividend by 8% in response to a flattening yield curve, which reduced its portfolio value, net interest margin, and core earnings. With a payout ratio above 100% and use of meaningful leverage, reducing its dividend was necessary.

Highway Holdings (HIHO) chopped its dividend by 50%. The industrial parts and components supplier had a payout ratio above 100% and was challenged by a double-digit drop in revenue as a large customer pulled back on orders.

Plagued by weak growth, declining profitability, and too much debt, mall-based retailer L Brands (LB) cut its dividend by 50% to free up more cash for deleveraging. L Brands had paid dividends without reduction for more than 25 consecutive years, and its stock price plunged 18% on the news.

Despite sporting a payout ratio below 30% and growing its quarterly revenue, Adient (ADNT) suspended its dividend. The automobile seat manufacturer was spun off from Johnson Controls (JCI) in 2016 and desired to improve its cash flow available for debt reduction.

Dean Foods (DF) cut its dividend by 67%. The milk processor and dairy products manufacturer was losing money and had a dangerously high debt load. Reducing its payout provided the company with more financial flexibility as it continued its turnaround plan.

Garrison Capital (GARS), a business development company, reduced its dividend by 18%. The firm's payout ratio had exceeded 100% due to a decline in earnings caused by lower fee income and an unrealized loss on one of its investments.

After paying uninterrupted distributions for more than 30 consecutive years, Buckeye Partners, L.P. (BPL) cut its distribution by 41%. The pipeline and storage terminal operator was challenged by weak oil market fundamentals.

As a result, the firm contended with an unsustainable payout ratio above 100%, needed to free up cash for debt reduction to protect its credit rating, and, with its stock price in the dumps, wanted to eliminate its need to access the public equity markets to fund annual growth capital.

Owens & Minor (OMI) cut its dividend by 71%, sending its stock price tumbling more than 40%. The medical supplies distributor had paid uninterrupted dividends since 1977, but its core customers (hospitals) were putting increased price pressure on the firm in an effort to cut costs. 

As growth in its legacy business struggled, management responded by making two large acquisitions in faster-growing segments, straining Owens & Minor's balance sheet and liquidity. The substantial dividend cut gives the company more breathing room to service its significant debt load while continuing to adapt its business model for the future.

Big 5 Sporting Goods (BGFV) chopped its dividend by 67% as the retailer of athletic shoes, apparel, and equipment couldn't sustain its payout ratio above 100% and needed to pay down debt as sales declined.  

General Electric (GE) axed its dividend for the second time in less than a year, this time reducing its payout by 92%. With power markets remaining weak and the company dealing with a very heavy debt load, GE needed to free up more cash to improve its balance sheet and give its turnaround efforts some breathing room.

CBL & Associates Properties (CBL) slashed its dividend by 63%. Declining occupancy and a very heavy debt load put pressure on the mall REIT to preserve liquidity and increase its financial flexibility.

Manning & Napier (MN) cut its dividend by 75%. The investment manager was struggling with a decline in assets under management and had an unsustainable payout ratio above 100%. Reducing the dividend provided the firm with more breathing room as it worked to restructure its core business. 

Anheuser-Busch InBev (BUD) reduced its dividend by 50% as management wanted to speed up debt repayments following the firm's $100-billion-plus acquisition of SABMiller in 2016. 

BUD's dividend cut involved some discretion since the firm's free cash flow more than covered its dividend, sales and earnings were growing, and the beverage maker was not facing any liquidity issues.

In fact, management stated that from a liquidity standpoint "there is no pressure whatsoever" and that the company's nicely balanced debt maturities were "no big issue." 

These situations are rather unusual and can be hard to evaluate. On paper, the dividend seemed like it could have been sustained. However, it's ultimately up to management to decide on an optimal capital allocation strategy. In BUD's case, that meant taking action to accelerate the deleveraging process.

Golar LNG Partners LP (GMLP) reduced its distribution by 30% after weak conditions in the shipping market stretched its balance sheet and pushed its payout ratio well above 100%.

After nearly tripling its quarterly distribution in July 2018, just three months later Hi-Crush Partners LP (HCLP) slashed its distribution by 70%. The frac sand producer was challenged by soft market conditions and also wanted to lower its payout ratio as it converted from a partnership to a corporation.

Capstead Mortgage (CMO) continued to face interest rate headwinds and see its portfolio value decline, forcing the mortgage REIT to cut its dividend by 21% — the firm's third dividend cut this year.

The financially distressed shopping center REIT DDR Corp (DDR) reduced its dividend by 47% following the spin-off of its lower quality properties. Shareholders received shares in the newly formed company, RVI, but it's unclear whether RVI will pay a regular distribution, especially given the company's plans to sell off all assets within 5 years.

Spirit Realty Capital (SRC) effectively lowered its dividend by 12% following its spin-off of Spirit MTA (SMTA). Including the shares investors were given in SMTA, annual dividends per share fell from 72 cents to 63.2 cents. The retail REIT opted to target a lower payout ratio near 75%, which is more in line with its peers. 

Orchid Island Capital (ORC) lowered its monthly dividend by 11% as interest rate volatility hurt the mortgage REIT's profitability.

New Senior Investment Group (SNR) cut its dividend by 50% due to the senior housing REIT's unsustainable payout ratio and substantial debt load. 

Maiden Holdings (MHI), a specialty reinsurance company, reduced its dividend by 67% as the firm struggled with underwriting losses.

Farmland Partners (FPI) lowered its dividend by 61%. The farmland REIT's cash flow did not cover its dividend, and falling crop prices remained a challenge.

R.R. Donnelley & Sons (RRD) cut its dividend by 79% in order to use more cash flow for improving its heavily indebted balance sheet. The integrated communications company was struggling as commercial print sales remained weak. 

SCANA (SCG) slashed its dividend by 80% to preserve cash. The utility is seeking a resolution with regulators to recover costs for its failed $7.7 billion nuclear construction project. Shareholders, rather than utility ratepayers, will likely be on the hook for a substantial amount of the project's loss.

Corus Entertainment (CJREF) slashed its dividend by 79% to conserve more cash for debt reduction. The television and radio company's advertising revenue was under pressure, driven by the continued rise of digital marketing channels and over-the-top streaming services. The firm's shares plunged 18% to reach an all-time low.

Himax Technologies (HIMX) reduced its annual dividend by 57% due to weak results in its cyclical semiconductor business, as well as the firm’s need to ramp up spending to expand its manufacturing capacity. 

Anworth Mortgage Asset Corporation (ANH), a mortgage REIT, moved its dividend lower by 7% due to its high payout ratio and interest rate volatility that lowered the value of its investment portfolio.

Capstead Mortgage (CMO) saw its portfolio value decline and borrowing costs rise as interest rates fluctuated, forcing the mortgage REIT to cut its dividend by 13%.

Arlington Investment Corp (AI) reduced its dividend by 32%. Rising interest rates reduced the value of its mortgage-related investments, and the firm maintains a high payout ratio and substantial financial leverage. 

Libbey (LBY) suspended its dividend in order to increase the glass manufacturer’s focus on debt reduction. 

Nordic American Offshore (NAO) dropped its dividend by 50% as the offshore oil & gas shipping market remained weak, keeping pressure on the capital intensive and unprofitable vessel company. 

Blueknight Energy Partners, L.P. (BKEP) cut its distribution by 45% as the provider of midstream energy services struggled with a coverage ratio below 1.0x, a weak crude oil storage market, and too much debt.

Aceto (ACET) slashed its dividend by 85% in response to the continued down cycle in the generics drug industry and the pressure it put on the company’s high debt load. 

TC Pipelines, LP (TCP) was adversely affected by a change in MLP regulations. The company needed to deleverage to prepare for lower future cash flow, and cutting its distribution by 35% was part of the solution. 

Nordic American Tankers (NAT) slashed its dividend by 67% as a weak tanker market caused the indebted vessel company to operate at a loss.  

SunCoke Energy Partners, L.P. (SXCP) reduced its distribution by 33% in order to help the company further pay down debt and maintain some cushion for its credit facility’s leverage covenant. 

Dynagas LNG Partners LP (DLNG) cut its distribution by 41% following a strategic review of the business. Management desired to improve the energy MLP's coverage ratio and strengthen its balance sheet after a drop in charter rates caused operating cash flow to decline.

Pier 1 Imports (PIR) suspended its dividend. The retailer of decorative accessories, furniture, candles, and housewares was saddled with debt, had an unsustainable payout ratio above 100%, and was experiencing sharp sales and earnings declines. Discontinuing the dividend freed up cash to help the distressed company's turnaround efforts.

Franklin Street Properties (FSP) reduced its dividend for the first time since 2008, announcing a 53% cut as the REIT transitions its property portfolio from a suburban to an urban orientation which results in higher leasing costs per square foot.

LaSalle Hotel Properties (LHO), a hotel REIT, cut its dividend by 50%. The firm saw revenue per available room decline in 2017 and expected another dip in 2018 as supply growth in many of its markets pressured the REIT's cash flow. 

Navios Maritime Midstream Partners L.P. (NAP) owns and operates tanker vessels. The company chopped its dividend by 70% in response to challenging market conditions and its need to maintain a healthy balance sheet. 

Five Oaks Investment Corp (OAK) dropped its dividend by 40% as a flattening yield curve hurt the mortgage REIT’s investment income. These businesses maintain high payout ratios and use significant financial leverage, so there is little margin for error. 

Capstead Mortgage (CMO) cut its dividend by 16% as shorter term interest rates increased at a faster pace than longer term interest rates, pushing down the value of the REIT’s mortgage-related investments.

Alcentra Capital (ABDC) is a business development company that cut its dividend by 28% due to underperforming credit investments and yield compression. 

National CineMedia (NCMI) announced a 23% dividend cut as its profits fell and the heavily indebted cinema advertising company needed more cash to reinvest in its business as it combats declining movie theater traffic.

IDT (IDT) swung to a loss and decided to invest more heavily in its growth initiatives, leading the telecom business to cut its dividend by 53%. 

CYS Investments (CYS) reduced its dividend by 12% after the mortgage REIT was challenged by falling investment income. 

A year after reducing its dividend by 19% to conserve cash, Wheeler Real Estate Investment Trust (WHLR) eliminated its dividend entirely in order to further improve the Retail REIT's weak balance sheet.

Frontier Communications (FTR) eliminated its dividend to save cash since the telecom company was losing money and on the path towards bankruptcy. 

MercadoLibre (MELI), the largest online commerce ecosystem in Latin America, decided to eliminate its dividend in favor of using all of its cash internally for growth. This dividend cut was difficult to catch in advance for several reasons.

Specifically, MercadoLibre reported 71% sales growth the quarter it announced its dividend suspension, its free cash flow payout ratio was below 15%, the company had no debt, and its cash totaled nearly $600 million compared to annual dividend commitments of approximately $27 million. 

Simply put, management's decision to stop the dividend was not due to the firm's financial health, but rather a change in capital allocation policy to take advantage of growth opportunities. Here was the company's statement: 

"After reviewing our capital allocation process the Board of Directors has concluded that the Company has multiple investment opportunities that should generate greater returns to shareholders through investing capital into the business than issuing a dividend. Consequently, the decision has been made to suspend the payment of dividend to shareholders as of the first quarter of 2018, as it will free up capital for investment in multiple projects in our various platforms."

There's no easy way to get in front of these situations that involve so much management discretion, but fortunately they are very rare. Sticking with companies that have longer histories of paying stable dividends can help, and that is one of the factors our Dividend Safety Score system reviews.

MercadoLibre's dividend was quite small (MELI's dividend yield was less than 0.2%), and its stock price was largely unchanged on the news (and up over 80% in the year leading up to the cut). In other words, not only were few investors likely to have owned this stock for income in the first place, but any who did could have moved on to another idea without incurring a capital loss.

Macquarie Infrastructure Company (MIC), the fuel storage infrastructure specialist, dropped its dividend by 31%, sending its stock price tumbling more than 40%. The dividend cut will conserve cash to help the highly leveraged MLP preserve its credit rating and invest in growth projects after failing to renew some oil client contracts.

Dine Brands Global (DIN) chopped its dividend by 35% as its Applebee's and IHOP restaurant chains struggled and the company maintained a very high debt load.

Oaktree Strategic Income (OCSI) was challenged by volatile investment income and a high payout ratio, forcing the business development company to reduce its dividend by 26%.

NuStar GP Holdings, LLC (NSH) cut its distribution by 40% as the indebted MLP struggled to cover its payout and no longer had affordable access to external financing.

NuStar Energy L.P. (NS) plunged as much as 21% on news that the pipeline operator was cutting its distribution by 45%. Costly acquisitions, hurricane damage, excessive financial leverage, and a need to free up more cash for investments were all factors. 

Harvest Capital Credit (HCAP) reduced its dividend by 16% after experiencing a significant drop in investment income. Shortly after, the firm delayed filing its annual report, underscoring the risks, complexities, and challenges of investing in many business development companies. 

Oaktree Specialty Lending (OCSL) cut its dividend by 32% due to a decline in the business development company's investment income.   

Navios Maritime Acquisition (NNA), an owner and operator of tanker vessels, cut its dividend by 60% to preserve cash as the business struggled with too much debt and weak end market conditions. 

Collectors Universe (CLCT) lowered its dividend by 50% in response to a challenging quarter, an unsustainable payout ratio, and a need for the collectibles authenticator to redirect more cash toward growth opportunities. 

Nevsun Resources (NSU) suspended its dividend. The base metals mining and exploration company desired to free up more cash to fund large development projects as it combatted operating losses and production challenges. 

Five Oaks Investment Corp (OAKS) slashed its dividend by 33% as a flattening yield curve hurt the mortgage REIT's investment income.

Bluerock Residential (BRG) announced a 44% reduction to its dividend driven by the apartment REIT's decision to internalize its external management structure and implement a more sustainable payout ratio. 

PG&E (PCG) temporarily suspended its dividend. Wildfires were causing extensive damage throughout California, and regulated utility PG&E was under investigation to see if it caused some of the fires. If so, the company would face a large liability. 

PG&E decided to preserve cash by temporarily suspending its dividend until more is known about the ongoing situation. We are not sure much could have been done to get in front of this one. This was a rather binary outcome that seemed to have a low probability at the time and couldn’t be traced in PG&E’s financial statements, which were otherwise in decent shape, or identified in analysts' earnings estimates for the year ahead, which were healthy.

Teva Pharmaceutical (TEVA) suspended its dividend entirely and was a great example of the dangers of debt. Prior to its dividend cut, Teva maintained a payout ratio below 30%, had paid uninterrupted dividends for more than 20 years, and was generating solid cash flow.

However, the company's debt spiked following its $40.5 billion acquisition of Actavis Generics in 2016. As generic drug prices came under pressure, Teva's urgency to conserve cash flow to service its debt load increased, ultimately resulting in two dividend cuts.

We have since added a new debt metric to our scoring system to better identify situations like Teva's, and we now also make use of forward-looking analyst estimates to spot companies with fundamentals that are more likely to continue deteriorating.

KCAP Financial (KCAP) was forced to lower its dividend by 17% due to a fall in its net investment income, which commonly causes issues for business development companies given their very high payout ratios.

Ellington Residential Mortgage REIT (EARN) reduced its dividend by 8% in response to a flattening yield curve, which reduced its net interest margin and core earnings. 

General Electric (GE) cut its dividend by 50% to better align its payout with the firm's declining cash flow, preserve cash in light of its high financial leverage, and adjust its capital allocation framework under its new CEO. 

FS Investment (FSIC) lowered its dividend by 15% as underperforming investments and a high payout ratio weighed on the business development company.

Cameco (CCJ) slashed its dividend by 80% as depressed uranium prices eroded the energy producer's profits, pushing its payout ratio above 200%. The company had paid uninterrupted dividends for more than 20 years prior to the cut.

EVERTEC (EVTC) is a small-cap transaction processing business with operations centered in Latin America. Despite having a payout ratio near 20% at the time, management decided to temporarily suspend the firm's dividend due to unstable and uncertain operating conditions in Puerto Rico. 

Interestingly, EVTC's stock price subsequently rallied more than 50%, and in September 2018 the company began paying dividends (albeit at half the previous payout amount). Regardless, our scoring system now handles smaller companies more conservatively, reflecting their generally more concentrated business activities and more dynamic capital allocation policies.

CBL & Associates Properties (CBL) cut its dividend by 25% as the REIT had too much debt and declining funds from operations.

Alcentra Capital Corporation (ABDC) dropped its dividend by 27%. Underperforming investments and a high payout ratio led to the business development company's dividend reduction.

Ellington Financial (EFC) cut its dividend by 9% in order to free up additional capital for new investments. 

Suburban Propane Partners (SPH) ran into trouble as two consecutive warm winters reduced demand for its propane and further stretched its weak balance sheet, causing the firm to reduce its dividend by 32%.

Waddell & Reed Financial (WDR) slashed its dividend by 46% as the investment manager continued experiencing asset outflows that pushed its payout ratio near 90%.

Genesis Energy, LP (GEL) needed to strengthen its balance sheet in order to continue having access to affordable capital for its growth projects, forcing the midstream energy MLP to chop its distribution by 31%. 

National American University (NAUH) eliminated its dividend entirely as the accredited institution of higher learning was in desperate need to preserve liquidity given its operational struggles, large debt burden, and spiking payout ratio. 

ATN International (ATNI), a small-cap telecom company, had increased its dividend for 20 consecutive years. Despite its healthy payout ratio and sub-3% yield, management decided to "strategically shift" the firm's capital allocation by reducing the firm’s dividend by 50% in favor of using the capital to invest more in growth opportunities. 

There is not an easy way to get in front of a shift like this when a firm's underlying fundamentals are solid, but we rate small-cap stocks more conservatively today since they can have more dynamic capital allocation policies over time.

Capstead Mortgage (CMO) lowered its dividend by 10% as net interest margins declined due to higher mortgage prepayment levels and higher borrowing costs, which pressured the mortgage REIT’s high payout ratio. 

Ship Finance International (SFL) cut its dividend by 22% due to the soft tanker market and the company’s dangerously high debt load. 

Prospect Capital (PSEC) reduced its dividend by 28%. The business development company’s net investment income declined due to the firm’s desire to avoid riskier investments and reduce originations.

Plains GP Holdings LP (PAGP) needed to reduce debt to reach its targeted credit markets and lessen its dependence on raising growth capital via issuing equity. As a result, the midstream MLP slashed its distribution by 46%. 

Plains All American Pipeline, L.P. (PAA) needed to reduce debt to reach its targeted credit markets and lessen its dependence on raising growth capital via issuing equity. As a result, the midstream MLP slashed its distribution by 46%. 

Chicago Bridge & Iron Company (CBI) completely eliminated its dividend despite maintaining a low payout ratio, sending its stock down over 25% on the news. The engineering and construction company was saddled with debt and dealing with depressed business results. 

Black Box (BBOX) suspended its dividend, sending its shares falling more than 40%. The IT infrastructure provider was saddled with debt and losing money, forcing it to amend its credit agreement. Stopping dividend payments freed up cash to help improve the company's financial health.

Teva Pharmaceutical (TEVA) cut its dividend by 75% and was a great example of the dangers of debt. Prior to its dividend cut, Teva maintained a payout ratio below 30%, had paid uninterrupted dividends for more than 20 years, and was generating solid cash flow.

However, the company's debt spiked following its $40.5 billion acquisition of Actavis Generics in 2016. As generic drug prices came under pressure, Teva's urgency to conserve cash flow to service its debt load increased, ultimately resulting in two dividend cuts (management suspended the dividend in December 2017).

We have since added a new debt metric to our scoring system to better identify situations like Teva's, and we now also make use of forward-looking analyst estimates to spot companies with fundamentals that are more likely to continue deteriorating.

Teekay Offshore Partners L.P. (TOO), a marine energy transportation company, cut its dividend by 91% due to too much debt, falling distributable cash flow, and weak end market conditions.

Bristow Group (BRS) cut its dividend by 79% after a severe cyclical downturn in the offshore energy market caused the helicopter services business to operate at a loss. 

Windstream Holdings (WIN) saw its stock price plunge nearly 30% after it announced it was eliminating its dividend. The indebted telecom company was losing customers, needed to de-lever, and faced large expenditures to build out its fiber network.

RAIT Financial (RAS) chopped its dividend by 44% as management stepped up efforts to lower financial leverage and refocus the business on its core commercial real estate lending operations. 

Nordic American Tankers (NAT) slashed its dividend by 25% due to the capital-intensive shipping company’s declining cash flow and weak balance sheet.

Arlington Asset Investment Corp (AI) lowered its dividend by 12% to strengthen the investment firm’s balance sheet and better protect itself from instability in the mortgage sector.

Mattel (MAT) cut its dividend by 61% due to its unsustainable payout ratio, high debt load, and need to reinvest for growth as its iconic toy brands, such as Barbie, struggled in an increasingly digital world. 

Ampco-Pittsburgh Corporation (AP), an engineering products business, suspended its dividend entirely to put the funds towards debt repayment and growth initiatives to turn the unprofitable company around.

CIM Commercial Trust (CMCT), an office REIT, reduced its dividend by 43% as its payout ratio was too high after divesting various properties. 

Wheeler Real Estate Investment Trust (WHLR) slashed its dividend by 19% to conserve cash due to the retail REIT’s heavy debt load. 

Stage Stores (SSI) announced a 67% reduction to its dividend in response to a weak retail environment and the firm’s need to strengthen its balance sheet.

Stein Mart (SMRT) responded to a weak retail environment, its heavy debt load, and declining earnings by eliminating its dividend entirely.

Time Inc. (TIME) chopped its dividend by 79% due to a severe decline in print advertising revenue and the company’s substantial amount of debt. Shares plunged 17% on the news.

Medley Capital (MCC) was forced to lower its dividend by 27% as a result of the business development company’s decreasing net investment income and high payout ratio.

Frontier Communications (FTR), a telecom services provider, announced a 62% cut to its dividend after struggling with customer losses and too much financial leverage.

Enbridge Energy Partners, L.P. (EEP) was challenged by weak commodity markets, heavy debt, and a need to internally fund more of its growth projects. As a result, the midstream energy MLP decreased its distribution by 40%.

Enbridge Energy Management, LLC (EEQ) chopped its dividend by 40% in order to strengthen its balance sheet and maintain a more sustainable coverage ratio. The energy company’s cash flow was hurt from weak commodity markets.

CSI Compressco LP (CCLP) suffered from high debt and weak energy prices. As a result, the natural gas company reduced its dividend by 50%.

Superior Industries (SUP), a small-cap vehicle wheel manufacturer, cut its dividend by 50%. The firm announced a transformative acquisition to nearly double in size. Due to its higher cost of financing as a smaller company, management reduced the dividend to help afford the deal. 

Superior Industries had paid uninterrupted dividends for more than 20 years prior to this event, so the cut was a surprise that could not have been predicted ahead of time without knowing the firm's intentions to make a big acquisition. We treat smaller firms more conservatively today to recognize their generally more dynamic capital allocation policies.

Dynex Capital (DX) slashed its dividend by 14% when the mortgage REIT was faced with higher interest rates, rising financing costs, and an unsustainable payout ratio.

New York Mortgage Trust (NYMT) experienced financial difficulties resulting in a dividend reduction of 17% when financial and bond markets became more volatile.

Capstead Mortgage (CMO) struggled after portfolio yields did not improve as management had expected. As a result, the mortgage REIT cut its dividend by 9%.

OHA Investment Corporation’s (OHAI) portfolio invested too much in weak energy companies, hurting its profitability. In order to help the highly leveraged business development company recover, its dividend was lowered by 67%.

Cypress Energy Partners, L.P. (CELP) is a pipeline services provider to the energy industry. In order to conserve cash due to its heavy debt load and softening commodity prices, the company chopped its distribution by 48%.

Manning & Napier (MN), an investment manager, experienced a meaningful decline in its assets under its management. As a result of its falling earnings and elevated payout ratio near 100%, the firm’s dividend was slashed by 50%.

BlackRock Capital Investment Corporation (BKCC) lowered its dividend 14% in response to underperforming investments the business development company had made in the troubled oil and gas sector.

TICC Capital (TICC) reduced its dividend by 31% as tighter loan spreads reduced the business development company’s investment income.

Seaspan (SSW), a water vessel leasing company, was challenged by excess industry supply and heavy debt. Management dropped the dividend by 67%.

Kindred Healthcare (KND) suspended its dividend in order to repay debt and free up more capital for growth. The home healthcare services company was losing money and operated with too much leverage.

Nevsun Resources (NSU), a base metals mining and exploration company, found itself needing more cash to fund large projects as it encountered production challenges and declining profitability. The business cut its dividend by 75%.

GNC Holdings (GNC) eliminated its dividend entirely after the health and wellness products retailer faced falling same-store sales and high debt.

Equity One (EQY) reduced its dividend by 18% as the shopping center REIT struggled with its high payout ratio and the continued rise of online shopping. 

Scorpio Tankers (STNG) slashed its dividend by 92% as a result of the tank vessel company’s heavy debt and declining cash flow as petroleum transportation markets remained weak.

Highway Holdings (HIHO), an industrial components manufacturer, chopped its dividend by 30% as it faced declining sales, lower profitability, a high payout ratio, and a dangerous amount of financial leverage.

Fifth Street Finance Corp (FSC) slashed its dividend by 61% as the business development company responded to its declining investment income, excessive financial leverage, and need to restructure.

Alon USA Partners, LP (ALDW), an integrated downstream oil refinery company, dropped its dividend by 27% after the MLP experienced declining sales, falling distributable cash flow, and increasingly risk credit metrics. 

Columbia Property Trust (CXP) cut its dividend by 33% due to the office REIT’s disposal of lower quality properties and need to strengthen its balance sheet.

The Mosaic Company (MOS), a phosphate and potash producer, cut its dividend by 46% after weak fertilizer markets, declining cash flow, and too much debt pressured the business. 

Ericsson (ERIC), a diversified communications equipment provider, responded to challenging telecom market conditions and its heavy debt burden by reducing its dividend by 73%.

Meridian Bioscience (VIVO) turned to slashing its dividend by 38% as the life science company’s most profitable segment was weak and recovering slower than expected, creating a dangerously high payout ratio. The stock was down over 20% on the news.

Nordic American Tankers (NAT) lowered its dividend by 23% as weak shipping market conditions caused cash flow to decline, the company’s balance sheet was strained, and the capital-intensive tanker business needed to preserve capital. 

Pearson (PSO) suffered from declining demand for its textbooks and its significant financial leverage. The educational products company reduced its dividend by 72%.

ARMOUR Residential REIT (ARR) experienced declining revenue and needed to conserve cash due to its heavy debt load and high payout ratio. The mortgage REIT lowered its dividend by 14%.

Resource Capital Corporation (RSO) suffered from underperforming debt investments, high financial leverage, and an unsustainable payout ratio. In response, the mortgage REIT slashed its dividend by 88%.

KCAP Financial (KCAP) is a business development company that cut its dividend by 20% due to falling net investment income and its stretched balanced sheet.

Liberty Property Trust (LPT), an industrial and office REIT, reduced its dividend by 16% in response to the company’s restructuring and asset sales, which will reduce future cash flow. 

Investors Real Estate Trust (IRT) cut its dividend by 46% as the diversified REIT combatted a high payout ratio and declining cash flow caused by volatile energy markets and increased supply. 

CoreCivic (CXW), a REIT providing prison facilities used by government agencies, slashed its dividend by 22% due to declining cash flow and regulatory headwinds as several federal agencies considered ending their use of privately run prisons.

Comtech Telecommunications (CMTL) was strained by its significant financial leverage and challenging business conditions. The communications equipment business cut its dividend by 67%.

Allegheny Technologies (ATI), a specialty metals manufacturer, suspended its dividend entirely due to weak end markets and a desperate need to shore up its indebted balance sheet.

PennantPark (PNNT) reduced its dividend by 36% after the investment firm suffered from weak energy markets, falling yields, and decreasing investment income.

Daxor Corporation (DXR), a medical and biotechnology company, lowered its dividend by 33% to free up cash for investment.  

THL Credit (TCRD) was challenged by lower yields and refused to invest in riskier assets. Combined with its high payout ratio, the business development company was forced to reduce its dividend by 21%.

Horizon Technology Finance (HRZN) slashed its dividend by 13% as the business development company experienced lower interest income due to its shrinking loan portfolio.

Ellington Financial (EFC), a mortgage REIT, lowered its dividend by 10% after bond volatility hurt the value of its investment portfolio. 

Westmoreland Resource Partners, LP (WMLP) needed to preserve cash after being affected by a weak thermal coal market. The highly indebted energy MLP slashed its distribution by 33% to help with its recovery.

North European Oil Royalty Trust (NRT) chopped its dividend by 48% in response to weak energy markets and delayed royalty payments.

Telefonica (TEF) needed to accelerate its debt reduction efforts in order to preserve its investment grade credit rating. The telecommunications company slashed its dividend by 25%.

StoneMor Partners (STON) had increased its distribution each year since 2005 prior to announcing a 50% cut. The stock collapsed 45% on the news. The operator or cemeteries and funeral homes was experiencing sluggish revenue growth due to the rise in popularity of cremation over traditional burials. StoneMor Partners also operated with significant financial leverage, and its payout ratio had climbed to unsustainable levels in recent years.  

Oceaneering International (OII) cut its dividend by 44% despite its healthy free cash flow generation and balance sheet. The provider of engineered services and products to the offshore energy market believed it to be prudent to cut its payout given weak oil prices.

Martin Midstream Partners (MMLP) was hurt by lower oil prices, too much financial leverage, and a need to preserve cash in light of its increasing cost of capital. The midstream energy MLP reduced its distribution by 39%.

Diebold (DBD) acquired Wincor Nixdorf for $1.9 billion, which negatively impacted the company’s balance sheet. The services, software, and hardware company responded by lowering its dividend by 65% to help its deleveraging efforts.

Ferrellgas Partners, L.P. (FGP) cut its distribution by 81%. In an effort to diversify its business, in June 2015 the propane distributor paid $837.5 million to acquire Bridger Logistics, a midstream energy company. This deal saddled Ferrellgas with debt, forcing management to slash the distribution to protect the balance sheet when oil prices remained low and various legal issues arose.

Viacom (VIA) chopped its dividend by 50% in order to strengthen the media company’s balance sheet, improve its liquidity and invest in opportunities to grow its core business. 

SeaWorld Entertainment (SEAS) suffered from a heavy debt load, a high payout ratio, and bad publicity surrounding its killer whale shows. The company responded by dropping its dividend by 52% and eliminating it completely one quarter later.

San Juan Basin Royalty Trust (SJT) experienced financial turmoil from lower gas prices, resulting in a 34% decrease to its dividend.

Marine Petroleum Trust (MARPS) lowered its dividend by 41% in response to declining earnings caused by lower oil prices.

Mesa Royalty Trust (MTR) responded to lower gas prices by reducing its dividend by 36%. 

Communications Systems (JCS), a network services and architecture company, cut its dividend by 75% as it was losing money and wanted to direct more resources towards growth initiatives.

Textainer Group (TGH) needed to conserve cash due to container lessor company’s heavy debt load and low prices for new and used containers. They dropped their dividend by 88%.

Houston Wire & Cable (HWCC) responded to weak industrial demand, depressed energy markets, and its net losses by slashing its dividend by 50%.

Medley Capital (MCC) reduced its dividend by 27% after the business development company experienced falling net investment income.

Textainer Group Holdings Limited (TGH), a container leasing company, cut its dividend by 88% as it struggled with its high debt load and weak market conditions.

PDL BioPharma (PDLI) eliminated its dividend entirely in order to free up cash for strategic investments and provide financing for long-term growth.

Apollo Investment (AINV) suffered from high financial leverage and reduced its dividend by 25% as part of the management investment company’s restructuring strategy.

Computer Programs (CPSI) lowered their dividend by 47% as they moved to a variable dividend policy in response to fluctuation in sales and profits and too much financial leverage.

Calumet Specialty Products Parnters, L.P. (CLMT), a producer of petroleum-based specialty products, eliminated its distribution to strengthen its balance sheet and preserve capital.

Murphy Oil (MUR), an oil and gas exploration and production company, responded to depressed commodity prices and ongoing operating losses by cutting its dividend by 29%.

Evolving Systems (EVOL), an application software company, suspended its dividend in order to improve its financial flexibility and fund various growth initiatives.

Medallion Financial (MFIN) struggled with an underperforming loan portfolio and weak liquidity. This resulted in the specialty finance company dropping its dividend by 80%.

Williams (WMB) reduced its dividend by 69% due to weak energy markets and a need to protect the natural gas company’s credit rating.

North European Oil Royalty Trust (NRT) encountered trouble with depressed energy markets and delayed royalty payments, leading the firm to reduce its dividend by 38%.

CVR Partners (UAN) was losing money, so the indebted nitrogen fertilizer company responded by lowering its dividend by 37%. 

Potash (POT), a potash, nitrogen, and phosphate products company, lowered its dividend by 60% due to weak fertilizer markets.

American Capital Agency (AGNC), a mortgage REIT, cut its dividend by 10% due to volatile market conditions, unfavorable interest rate fluctuations, and its high payout ratio.  

Seadrill Partners LLC (SDLP) wanted to improve its liquidity position after numerous energy customers cancelled their contracts. The offshore drilling rig company reduced its dividend by 60%.

Cross Timbers Royalty Trust (CRT) decided to drop its dividend by 11% in response to lower oil and gas volumes and its high payout ratio.

Ecology and Environment (EEI) is a micro-cap stock that had very solid financial health, but management decided it wanted to invest more for growth, freeing up additional cash for reinvestment by reducing the firm’s dividend by 17%. 

There was not much we could have done to flag this dividend cut ahead of time since management’s decision to reduce the dividend had almost nothing to do with the company’s actual fundamentals. However, we treat micro-caps with greater conservatism today in recognition of their generally more dynamic capital allocation policies.

Plains GP Holdings, L.P. (PAGP) was hurt by lower oil prices, leading the midstream energy infrastructure company to lower its distribution by 11% in order to preserve capital.

Plains All American Pipeline, L.P. (PAA), an energy infrastructure and natural gas company, slashed its distribution by 21% to preserve capital after being hurt by lower oil prices.

Daktronics (DAKT), a company that manufactures electronic entertainment technology, announced a 40% decrease to its regular dividend in order to add a special, less predictable dividend going forward.

Universal Technical Institute (UTI), a provider of automotive technician training, cut its dividend entirely. The education company was losing money. 

Capstead Mortgage (CMO), a mortgage REIT, struggled with volatile investment income, a high payout ratio, and substantial debt. As a result, management cut the firm’s dividend by 12%. 

CYS Investments (CYS) lowered its dividend by 4% as the mortgage REIT combated volatile interest rates and a high payout ratio.

RF Industries (RFIL), a manufacturer of electronic components and cabling solutions, chopped its dividend by 71% as the company was losing money and needed to preserve capital. 

Sabine Royalty Trust (SBR) slashed its dividend by 38% in response to lower oil and gas volumes and prices. 

Marine Petroleum Trust (MARPS) lowered its dividend by 18% in response to damage caused by lower oil prices.

Cross Timbers Royalty (CRT) was hurt by lower oil prices and its high payout ratio, resulting in a 13% decrease to its dividend.

San Juan Basin Royalty Trust (SJT) experienced financial turmoil from lower gas prices, resulting in a 32% decrease to its dividend.

United-Guardian (UG), a manufacturer of pharmaceuticals, cut its dividend by 30% after experiencing marketing problems in China which caused sales to drop nearly 50%.

TheStreet (TST) eliminated its dividend entirely in response to the financial news and information provider’s operating losses and need to restructure the company.

OCI Partners LP (OCIP) suffered as prices of methanol, ammonia, and natural gas dropped. The indebted and capital-intensive methanol and ammonia producer lowered its dividend by 81%. 

Legacy Reserves LP (LGCY), an oil and natural gas development company, suspended its dividend as it dealt with depressed energy prices. The firm needed to strengthen its indebted balance sheet and preserve capital. 

EV Energy Partners, LP (EVEP) eliminated its dividend after the oil and gas company was challenged by ongoing net losses, volatile energy markets, and dangerously high financial leverage. The firm filed for bankruptcy two years later.

Carlyle Group (CG) responded to challenging market conditions by issuing a 10% reduction to the asset management company’s dividend.

Memorial Production (MEMP) experienced weak industry conditions that forced the indebted energy MLP to reduce its distribution by 70%.

Alliance Holdings GP, L.P. (AHGP) cut its distribution by 41% as depressed coal prices lowered its distributable cash flow and further strained its indebted balance sheet. 

Alliance Resource Partners, L.P. (ARLP) lowered its distribution by 35% as it attempted to recover from a weak coal market and too much debt on its balance sheet.

Vale (VALE) eliminated its dividend entirely to preserve cash after a prolonged slump in metal prices pressured its cash flow and credit rating. 

NGL Energy Partners, LP (NGL) slashed its distribution by 39% in response to low commodity prices and its need to conserve cash due to the midstream energy MLP’s high financial leverage and payout ratio.

National Oilwell Varco (NOV) cut its dividend by 89% to preserve cash flow and keep its balance sheet healthy in response to plunging oil prices. 

CONSOL Energy (CNX) responded to weak natural gas and coal prices, which caused the indebted company to lose money, by suspending its dividend.

Goldcorp (GG) experienced weak production levels and a needed to maintain a strong balance sheet, resulting in the gold production company lowering its dividend by 67%. Goldcorp’s stock dropped more than 10% on the news. 

BHP Billiton (BHP) was hurt by a rout in commodity markets that sent the diversified miner’s earnings tumbling. To protect its solid credit rating, BHP slashed its dividend by 87%, marking its first reduction since 1988.

Devon Energy (DVN) cut its dividend by 75% to protect the oil and gas producer’s balance sheet during challenging energy markets.

Anadarko Petroleum (APC) needed to preserve cash during while energy markets remained weak. The oil and natural gas company lowered its dividend by 81%.

ConocoPhillips (COP) was burning through cash due to the oil price cash. Due to its need to protect its balance sheet and preserve cash, the oil and gas exploration and production company cut its dividend by 66%, its first reduction in more than 25 years.

Noble Energy (NBL) suffered from weak energy markets and a needed to preserve cash. The oil and gas producer therefore lowered its dividend by 44%. 

Kinder Morgan (KMI), an energy infrastructure giant, slashed its dividend by 75% to preserve cash. The pipeline company’s dividend cut gave it the capital it needed to fund its expansion plans while allowing it to maintain an investment grade credit rating. Companies that depend on raising capital from debt and equity markets to fund their dividends and growth projects can be forced to make difficult decisions if their access to capital becomes strained.