98% of Dividend Cuts Caught in Advance

ARMOUR Residential REIT (ARR) reduced its dividend by 11%. The residential mortgage REIT faced headwinds from falling long-term interest rates, which increase mortgage prepayment risk and reduce the profit spread the business earns.

Arlington Asset Investment Corp (AI) slashed its dividend by 40%. The highly leveraged mortgage REIT was under pressure as the flattening yield curve pushed down its earnings and was causing its payout ratio to rise to an unsustainable level.

Two Harbors Investment (TWO) reduced its dividend by 15%. Lower interest rates led to accelerated mortgage prepayment speeds, pressuring the residential mortgage REIT's earnings and sending its payout ratio above 100%.

Ashford Hospitality Trust (AHT) slashed its dividend by 50%. Despite maintaining a payout ratio near 50%, the hotel REIT had too much debt and needed to preserve more capital to strengthen its balance sheet. Shares plunged 15% on the news.

Anworth Mortgage (ANH) cut its dividend by 15%. The mortgage REIT 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%, leading to the dividend reduction.

Ellington Residential Mortgage REIT (EARN) reduced its dividend by 18%. The flattening yield curve reduced the firm's portfolio value, net interest margin, and core earnings. With a payout ratio above 100% and use of meaningful leverage, cutting its dividend was necessary.

GameStop (GME) eliminated its dividend, sending its shares plunging 30%. The troubled video game retailer experienced steep sales declines as online gaming disrupted its business. With a payout ratio approaching 100% and a highly leveraged balance sheet, GameStop needed to improve its financial flexibility.

Daktronics (DAKT) cut its dividend by 29%. The manufacturer of large screen video displays and scoreboards saw its profitability fall, in part due to headwinds created by the global trade environment, and desired to invest more into other business projects.

Vodafone (VOD) reduced its dividend by 40%. In October 2018, we published a note warning that the telecom firm's payout could find itself on shaky ground in the year ahead. Here's a relevant excerpt:

"With Vodafone's dividend amounting to around $4.5 billion per year (compared to more than $35 billion of debt), reducing the payout is certainly a lever management could pull to accelerate deleveraging and create more breathing room for big-ticket investments the firm's network requires...

With the dividend consuming the bulk of Vodafone's free cash flow, plus rising leverage from the Liberty Global deal, the capital-intensive nature of its businesses, and very competitive telecom markets in Europe, there is little room for error...

As conservative income investors, we prefer to stick with financially stronger businesses that score closer to 60 or higher for Dividend Safety...The next year could be volatile for Vodafone as investors learn more about the company's health and ability to remain committed to its dividend."

Addressing the dividend cut, management called out weaker than expected revenue trends due to "a more intense environment." While the dividend was technically still covered by free cash flow, reducing the payout allows Vodafone to proactively prioritize faster deleveraging and improve its financial headroom as it invests for the future.

Ciner Resources LP (CINR) cut its distribution by 40%. Despite recording double-digit cash flow growth and maintaining a distribution coverage ratio above 1.0, the commodity chemical producer wanted to redirect more capital to its growth projects. CINR units fell 15% on the news.

J2 Global (JCOM), an internet services provider, suspended its dividend in favor of preserving cash to more aggressively grow its business through acquisitions. However, JCOM's stock yielded only 2%, suggesting few investors owned JCOM for its payout. In fact, JCOM's stock price actually rose following the announcement and is currently near an all-time high.

With a healthy 25% payout ratio, low debt levels, solid cash flow, and EPS growth of 15% in the most recent quarter, JCOM's dividend cut would've been difficult to predict. Management certainly could've continued to pay the dividend but felt the company (and shareholders) would benefit more from quick expansion into new business lines outside the company's legacy fax and voice products. Here's what management said:

"Our portfolio of businesses - and the leadership managing it - has never been stronger or deeper,” said Vivek Shah, CEO of j2 Global. “It’s reflected in our first quarter results, our improved outlook for the remainder of the year and the breadth of promising investment opportunities in front of us. It’s why we are confident that by suspending our dividend, we can prudently direct the increasing cash flow to opportunities within our businesses to create greater shareholder returns over the near, medium and long term."

Discretionary cuts like JCOM's are extremely rare. Nevertheless, we're constantly improving our scoring system and will continue to look for ways to better assess dividend risk profiles.

Annaly Capital Management (NLY), a mortgage REIT, cut its dividend by 17%. The firm had been the only company in its industry not to have reduced its payout over the last five years, but a flattening yield curve and compressed spreads pushed its payout ratio above 100%. 

Management did not want to increase Annaly's leverage or risk profile just to maintain the dividend, so the payout was reduced to a more sustainable level for the long term. Generally speaking, mortgage REITs depend on many factors outside of their control, making their dividends riskier.

Meridian Bioscience (VIVO) suspended its dividend. Despite paying dividends for more than 20 years and sporting a payout ratio below 65%, the supplier of healthcare diagnostic test kits changed its capital allocation philosophy to increase growth investments and help fund an acquisition. VIVO shares fell 14%.

JMP Group LLC (JMP) slashed its dividend by 56% after the investment banking and asset management firm converted from a partnership to a C corporation for tax purposes. Management lowered the company's target payout ratio from 95% to 50% in order to retain more cash flow for growth investments.

Consolidated Communications (CNSL) suspended its dividend, sending its shares tumbling more than 20%. The provider of internet and phone services was losing money and had too much debt. Cutting the dividend freed up more cash for deleveraging efforts.

Martin Midstream Partners (MMLP) chopped its distribution in half. The midstream services provider was challenged by volatile commodity prices which pushed its payout ratio and debt metrics to dangerous levels. Management wanted to improve the distribution's coverage and the firm's financial flexibility. MMLP shares closed 21% lower on the news.

RPC (RES), a provider of oilfield services and equipment, cut its dividend by 50%. Management cited uncertainty in the oilfield market, which was expected to pressure RPC's earnings in the year ahead. Shares fell 18% on the news.

AGNC Investment Corp. (AGNC) lowered its monthly dividend by 11%. The mortgage REIT's net interest income was hurt by the flattening yield curve, leading management to reduce the dividend to keep AGNC's payout ratio at a more sustainable level.

Banc of California (BANC) cut its dividend by 54%. Despite maintaining an earnings payout ratio near 60%, the bank's new CEO opted to reduce the dividend in order preserve more capital that could be redeployed into "more useful and core aspects of the business in the near term." 

Blueknight Energy Partners, L.P. (BKEP) cut its distribution in half. The provider of midstream energy services had a payout ratio below 50%, but management desired to strengthen the firm's balance sheet.

Guess (GES) cut its dividend by 50%. Although the apparel retailer had paid uninterrupted dividends for more than a decade, management opted to reduce the payout in order direct more capital towards share repurchases. Guess's balance sheet was also stretched, and its high payout ratio limited the firm's financial flexibility.

Senior Housing Properties Trust (SNH) announced plans to reduce its annual payout to $0.55 to $0.65 per share, or a 62% dividend cut at the midpoint of guidance. The senior housing REIT needed to restructure a deal with a large struggling tenant, pressuring its cash flow. Combined with an elevated payout ratio and high debt load, a dividend cut was necessary. Shares fell nearly 20%.

Medley Management (MDLY) cut its dividend by 85%. The struggling investment manager was challenged by persistent asset outflows, which resulted in lower fee income and an unsustainable payout ratio.

Guangshen Railway (GSH), a passenger and freight train operator in China, reduced its annual dividend by 25%. Although the state-controlled company's payout ratio stood below 60% and the firm had no debt, management sought an even lower payout ratio as the firm's investment spending increased.

CBL Properties (CBL) suspended its dividend for two quarters. The mall REIT faced a class action lawsuit from 2016 related to claims it overcharged tenants for electricity. With a costly settlement drawing closer and the firm's balance sheet remaining weak, CBL needed to preserve capital. Shares fell 25% on the news.

Uniti Group (UNIT), a wireless infrastructure REIT, chopped its dividend by 92%. The firm's largest customer, Windstream, declared bankruptcy, creating uncertainty regarding its ability to honor its lease contract with Uniti. 

The REIT's lenders amended their credit agreement with the company as well, including a restriction on Uniti's ability to pay dividends. Combined with the cash flow uncertainty due to Windstream's financial distress, Uniti's dividend cut will help preserve cash as management works these challenges.

Friedman Industries (FRD) reduced its dividend by 33%. The steel processor and pipe manufacturer operates a cyclical business and expected margins to contract. As a micro-cap stock, Friedman's capital allocation decisions can be more dynamic, too.

Blue Capital (BCRH), a reinsurance provider in the property catastrophe market, slashed its dividend by 50%. Several hurricanes and wildfires caused the firm to lose money, resulting in a steep dividend cut.

THL Credit (TCRD), a business development company, cut its dividend by 22%. The firm's payout ratio exceeded 100% as management's actions to reduce risk in THL's portfolio resulted in lower investment income.

Dean Foods (DF) suspended its dividend. The milk processor and dairy products manufacturer was losing money and had a dangerously high debt load. Suspending its dividend provided the company with more financial flexibility as it continued its turnaround plan. Shares of Dean Foods dropped 14% on the news.

Despite paying uninterrupted dividends for more than 20 consecutive years, Protective Insurance Corporation (PTVCA) cut its dividend by 64%. The property and casualty insurer incurred steep underwriting losses in its commercial auto line and desired to preserve capital in order to protect its investment grade credit rating.

Summit Midstream Partners, LP (SMLP) slashed its dividend in half, sending its shares plunging as much as 20% on the news. The operator of midstream energy infrastructure assets needed to improve its ability to fund growth projects and maintain a healthier credit profile as it simplified its business structure.

Seritage Growth Properties (SRG), a retail REIT with substantial exposure to Sears, suspended its dividend. The move frees up cash to help management fund redevelopment efforts as Seritage works to continue reducing its exposure to Sears and improve its profitability.

County Bancorp (ICBK), a micro-cap bank stock operating in Wisconsin, lowered its dividend by 29%. The firm had a payout ratio below 15% and reported solid growth in deposits, book value per share, and loans serviced. 

Small companies can have more dynamic capital allocation policies regardless of their current business fundamentals, so we do our best to treat them more conservatively.

Kraft Heinz (KHC) cut its dividend by 36%. In November 2018, four months before the reduction was announced, we published a note warning of a possible dividend cut. 

We wrote, "given the company's somewhat high payout ratio and large amount of debt, if Kraft Heinz can't start delivering on its turnaround plan quickly (in 2019), then the risk of its frozen dividend being cut could increase. While the stock's current yield is certainly generous, conservative income investors may prefer to look at other companies with safer dividends, superior growth potential, and less hair from a heavy debt load and struggling turnaround effort."

The packaged food giant was struggling to achieve profitable growth due to changing consumer tastes and years of underinvestment in its brands. Management, led by private equity firm 3G Capital, desired to cut the dividend to accelerate the firm's pace of deleveraging in light of increasingly attractive opportunities they saw to make acquisitions and consolidate the industry. 

Given 3G Capital's ongoing struggles to create value from the 2015 Kraft-Heinz merger, investors were less than thrilled to hear management's excitement about making more large acquisitions. With investors losing confidence in Kraft Heinz's brands and 3G Capital's reputation as a savvy dealmaker, shares of KHC fell more than 25% on the news.

Fresh Del Monte Produce (FDP) suspended its dividend. After taking on debt for an acquisition and suffering a slide in profits, the global producer and distributor of fruit and vegetables violated certain covenants of its credit facility, which restricted payments of dividends unless certain ratios were met. FDP shares fell 17% on the news.

Less than four months after stunning investors with its first dividend cut in October 2018, Owens & Minor (OMI) slashed its dividend by 97%, sending its shares falling as much as 20%. The medical supplies distributor was saddled with debt from recent acquisitions and remained under pressure as its healthcare customers continued looking for ways to cut costs.

Harvest Capital Credit (HCAP), a business development company, lowered its monthly dividend by 16%. Management cited a "very competitive investment environment" which caused the firm's earnings to decline, pushing Harvest's payout ratio well above 100%.

Clearway Energy (CWEN), an energy infrastructure investment company with long-term contracted assets, reduced its dividend by 40% as uncertainty swirled around one of its largest customers, Pacific Gas & Electric (PG&E). PG&E filed for bankruptcy, heightening the risk that it may not honor the power purchase agreements it has with Clearway. In such a scenario where project distributions are restricted, the firm's liquidity and leverage would take a hit. 

By cutting the dividend, Clearway could proactively maintain its balance sheet and capital allocation flexibility during this period of uncertainty. As more clarity is provided on the PG&E, management said they will reassess the dividend. For now, PG&E has neither assumed, rejected, or sought to renegotiate its contracts with Clearway.

Latin American airline Copa Holdings (CPA) lowered its dividend by 25%. Higher fuel prices along with economic and currency weakness in Brazil and Argentina hurt the company's profits, pushing its payout ratio too far above management's 40% target. Airlines are cyclical, capital-intensive businesses with high debt loads and volatile earnings, so their dividends can be less predictable.

CenturyLink (CTL), a regional telecom business, chopped its dividend by 54%. The firm was struggling to grow and had too much debt following years of costly acquisitions. Cutting the dividend provided the firm with more flexibility to reduce its leverage. CTL shares fell 10% on the news.

Unique Fabricating (UFAB) slashed its dividend by 67%. The manufacturer of foam and plastic components used in cars and appliances wanted to increase its financial flexibility so it could more aggressively reduce its debt.

Medley Capital Corporation (MCC) cut its dividend by 50%. The business development company contended with poor investment performance, which had pushed its payout ratio well above 100%, and faced uncertainty regarding a proposed controversial merger which many shareholders opposed.

After rejecting a takeover offer and appointing a new CEO all in the last month, aerospace parts manufacturer Arconic (ARNC) decided to cut its dividend by 67% and split its company in two, with plans to eventually spin off one of the businesses. 

Management's sudden operational overhaul came despite the company recording double-digit organic sales and earnings growth in the quarter. Arconic also maintained a payout ratio below 20% at the time of its dividend cut and announced a new $500 million share buyback program.

In other words, Arconic's dividend cut was a capital allocation decision tied to management's new strategic plans for the company rather than unhealthy business fundamentals. Cuts like these are unusual but often difficult to get in front of.

Pitney Bowes (PBI) cut its dividend by 73%. The firm's earnings had eroded nearly 50% over the past decade as its mailing solutions business faced secular headwinds. While Pitney Bowes maintained a reasonable payout ratio near 60%, it also operated with substantial leverage. Management opted to cut the dividend to direct more capital towards growth initiatives as the business continued its turnaround.

Despite paying uninterrupted dividends for more than 20 years and maintaining an earnings payout ratio below 60%, Tupperware Brands (TUP) cut its dividend by 60%. The maker of food storage containers, cookware, and beauty products was struggling to achieve profitable growth as consumers opted for cheaper alternatives and e-commerce challenged its direct-sales model. Management wanted to free up more cash to fund the firm's turnaround initiatives. TUP shares tumbled more than 25% on the news.

Vale (VALE) suspended its dividend after one of its dams suddenly burst in Brazil, causing billions of dollars of damages and widespread tragedy with over 60 lives lost. The Wall Street Journal reported that this was "the most deadly mining incident of its kind in more than 50 years."

Vale's business was actually in good financial shape before disaster struck. The firm's net debt was at its lowest level since 2009, its payout ratio sat below 30%, there were no major debt maturities through 2021, cash on hand exceeded $6 billion, and earnings were expected to grow at a double-digit pace next year. Moody's had even upgraded Vale's credit rating to Baa3 (investment grade) in July 2018.

However, with a major liability forming overnight, plus severe public outrage at the company (Vale wisely suspended executive bonuses as well), the firm's decision was a prudent one. Given the unforecastable nature of an event of this magnitude, coupled with Vale's otherwise solid financial health, we were unable to get in front of this dividend cut. 

We already use a separate scoring template for mining companies to conservatively account for their cyclical and capital-intensive operations, but there were no warning signs in this situation (a German safety certifier had even found the mine to be stable in September). Going forward, we will consider placing even more weight on a miner's long-term dividend track record to gauge how conservative its operations have historically been managed.

Fortunately, the vast majority of dividend cuts can be spotted in advance since they are not triggered by a single high-impact, low-probability event. Unlike Vale, dividend cutters often possess some combination of a dangerously high payout ratio, falling earnings, and too much debt; their financial health does not materially change overnight.

Dynagas LNG Partners LP (DLNG) reduced its distribution by 75% less than a year after management first cut the payout by 41%. The owner and operator of LNG carriers said it needed to retain more cash flow as it approached a significant debt maturity later this year, suggesting its refinancing efforts weren't going well. DLNG's stock plunged nearly 30% on the news.

CSI Compressco LP (CCLP), a provider of compression services and equipment for natural gas and oil producers, slashed its distribution by 95%. The firm's distribution had consumed all of its distributable cash flow over the past year, and its leverage was too high. Cutting the distribution frees up cash flow that management will use to redeem CSI Compressco's preferred units, which were significantly diluting common unit holders.

Seadrill Partners (SDLP) cut its dividend by 90%. The provider of offshore contract drilling services experienced a decline in cash flow as dayrates remained weak, and the firm needed to preserve liquidity ahead of upcoming debt maturities.

Crescent Point Energy Group (CPG) chopped 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.

Teekay Offshore Partners L.P. (TOO) suspended its distribution. The marine energy transportation company desired to conserve more of its internally generated cash flows to reinvest in the business and reduce financial leverage.

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.

Hi-Crush Partners LP (HCLP) suspended its distribution. The frac sand producer was challenged by soft market conditions as energy companies completed fewer wells, and management desired to protect the company's balance sheet. HCLP shares tumbled more than 15% on the news.

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%.

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.

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%.

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.

Ferroglobe PLC (GSM) suspended its dividend. The silicon and specialty metal producer operates in a cyclical industry and saw its near-term outlook worsen, leading management to eliminate its dividend in order to save cash and deleverage its balance sheet.

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.

Digirad (DRAD) eliminated its dividend in favor of using the money on share repurchases instead. The provider of diagnostic healthcare services was losing money so its stock price was in the dumps. 

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 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.

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.

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. 

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) chopped 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.

Ferrellgas Partners, L.P. (FGP) suspended its distribution. The propane distributor was saddled with debt following a failed effort to diversify its business into the midstream sector. Ferrellgas violated its bond covenants which prevented the firm from paying distributions.  

Government Properties Income Trust (GOV) slashed its dividend by 68%, sending the office REIT's stock price tumbling 25% on the news. Government Properties was challenged by an unsustainable payout ratio above 100%, too much leverage, high tenant concentration, and significant near term lease expirations. 

Cutting the dividend reduced the firm's payout ratio to management's target level of 75% and provided more financial flexibility as Government Properties pursued plans to merge with Select Income REIT (SIR).

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.

Lexington Realty Trust (LXP) cut its dividend by 42% in February 2019, but management first communicated a dividend reduction was coming in September 2018. The REIT decided to divest most of its office properties, reducing its cash flow generation, and used proceeds to reduce debt and acquire more industrial properties. 

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.

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

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

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.

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. 

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%.

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. 

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.

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.

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.

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

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%. 

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 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. 

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

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. 

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.

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) 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. Per The Wall Street Journal, California’s legal framework renders utilities liable for damages from wildfires started by their equipment, even if they weren’t negligent.

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.

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.

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

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%.

Toymaker Mattel (MAT) suspended its dividend after being hurt by its large customer Toys 'R' Us filing for bankruptcy. Mattel needed to strengthen its balance sheet and improve its financial flexibility to turn around its faltering business.

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 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%. 

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%. 

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.

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. 

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

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.

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.

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 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.

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%.

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. 

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.

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.

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.

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. 

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.

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. 

Investors Real Estate Trust (IRET) cut its dividend by 46%. The residential REIT's payout was no longer covered by its cash flow, and the firm carried too much debt. Management desired more financial flexibility to improve and grow IRET's portfolio of multifamily properties. 

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. 

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

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.

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.  

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%.

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.

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

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%.

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

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.

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.

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%.

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

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

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.

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%. 

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

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. 

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

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

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

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.

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%.

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%. 

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

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. 

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

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.

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. 

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

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.