matisse capital management

Dividend Slashers - 11/5

    EP, El Paso Corp., from $0.05 to $0.01, quarterly; yield = 0.4%

    SUSQ, Susquehanna Bancshares, $0.26 to $0.05 to $0.01, quarterly; yield = 0.7%

    SVU, Supervalu Inc., from $0.175 to $0.088, quarterly; yield = 2.1%

Q3 - The Most Dividend Cuts since 1982

From Standard & Poor's:

"...fewer than 200 publicly owned U.S. companies in the index raised dividends in the quarter to Sept. 30, marking the worst third quarter for dividend increases.  S&P said 191 out of about 7,000 publicly owned companies raised dividend payments, down 44.8 percent from a year ago.

The number of issues for dividend cuts rose to 113 in the quarter, the highest since the same quarter of 1982. The ratio of increases to decreases came close to one-to-one, compared to the average of 15 increases for every decrease.

Dividend Slashers - 9/4

   ASBI, Ameriana Bancorp, from $0.04 to $0.01, quarterly, -75.0%

   INCB, Indiana Community Bancorp, from $0.12 to $0.01, quarterly, -91.7%

   TSFG, South Financial Group, from $0.01 to suspended, -100.0%

   WSBC, WesBanco, Inc., from $0.28 to $0.14 quarterly, -50.0%

Dividend Slashers - 8/22

   CIT, CIT Group, Inc., dividends supended on A,B,C and D preferred shares

   GSL, Global Ship Lease, from $0.23 quarterly to suspended.

   MTEX, Mannatech, Inc., from $0.02 quarterly to suspended.

   PCBK, Pacific Continental Corporation, from $0.10 to $0.04, quarterly.

   TSFG, South Financial Group, from $0.01 quarterly to suspended.

Manulife Halves its Dividend

Manulife Financial Corp. (MFC) cut its dividend Thursday, from C$0.26 to C$0.13, quarterly.  It is estimated this will save the company about $800-million per year.  Manulife Financial had been a constituent of S&P's Canadian Dividend Aristocrats.  Constituents have to consistently increase dividends every year for at least five years.  According to the Globe and Mail, one of Manulife's main problems is as follows:

"Manulife has been plagued by the stock exposure that it has as a result of its large variable annuity business. It sells products that are similar to personal pension or retirement plans, where the insurer invests a customer's money and promises future payments. As a result, Manulife built up a massive stock portfolio, which it chose to leave unhedged for a number of years....When markets plunged last year, Manulife had to raise billions in capital to make up for a widening shortfall in the amount it had promised to pay customers decades from now." (emphasis added).

Over the last 10 years, until the cut, MFC had increased its dividend at an annual compound rate of 17.9%, make it one of the better dividend growers in the TSX.  You can see the company's dividend history here.   Over the last year, shares have ranged from a low of $6.94, to a high of $37.55.  I have owned shares of this company in the past and sold them when news of the company's non-hedged position became public.  The share may be worth a second look, but not at the current price of $20.59; in my opinion there's not enough downside baked-in.  Over the last three years:

Dividend Slashers - 7/30

   AVY, Avery Dennison, from $0.41 to $0.20, quarterly

   EQR, Equity Residential, from $0.483 to $0.338, quarterly

   FCF, First Commonwealth Financial Corp., from $0.12 to $0.03, quarterly

   HMPR, Hampton Roads Bankshares, Inc., from $0.11 quarterly to suspended

   RES, RPC Incorporated, from $0.07 to $0.04, quarterly

   WBCO, Washington Banking Company, from $0.065 to $0.025, quarterly

Dividend Slashers and Companies to Watch

   MLVF, Malvern Federal Bancorp - from $0.04 to $0.03, quarterly

   MSW, Mission West Properties - from $0.20 to $0.25, quarterly

   PCAR, Paccar, Inc. - from $0.28 to $0.19, quarterly

   SCS, Steelcase Inc. - from $0.08 to $0.04, quarterly

Besides these slashers, other companies may be at risk:

REITs:  According to the Wall Street Journal, Dozens of REITs have lowered their payouts in recent months, and many have also launched stock offerings. This of course dilutes existing shareholders.  Per the WSJ, many REITs "borrowed heavily to acquire and develop buildings...saddling them with big debt loads."

BASF (BASFY.PK), the Germany-based chemical company, has said that its dividend is increasingly difficult to maintain, and many steel companies are also struggling in the current environment, with Tata Steel posting a fourth quarter loss.

Susquehanna Banchares (SUSQ) announced that it will miss its second quarter earnings target.  A Janney Montgomery analyst has said the company should cut its dividend to conserve capital .

Eaton Corp. (ETN) and Caterpillar (CAT) may be at risk for reducing their dividends according to Merrill Lynch.  Rereportedly "Caterpillar could cut slash quarterly dividend to 10 cents a share from 42 cents."  Both companies currently yield above 5.0%, well above their historic average yields, which are closer to 2.5%.

Disclosure: the author is long BASFY.PK and ETN.

More Dividend Slashers - 6/20

   BPOP, Popular, Inc. - from $0.02 to suspended

   BXP, Boston Properties - from $0.68 to $0.50, quarterly

   ELT, Callaway Golf Co. - from $0.07 to $0.01, quarterly

   PGC, Peapack-Gladstone Financial Corp. - from $0.16 to $0.05, quarterly

   VMC, Vulcan Materials Co. - from $0.49 to $0.25, quarterly

Dividend Slashers - 6/7

   CBL, CBL & Associates Properties - from $0.37 to $0.11, quarterly

   CSA, Cogdell Spencer - from $0.225 to $0.11, quarterly

   KRC, Kilroy Realty - from $0.58 to $0.35, quarterly

   RTP, Rio Tinto, PLC- interim dividend canceled

   STLD, Steel Dynamics - from $0.10 to $0.075, quarterly

   WOR, Worthington Industries, Inc. - from $0.17 to $0.10, quarterly

Dividend Slashers - 5/11

   BBT, BB&T Corp. - from $0.47 to $0.15 per share, quarterly

   BVF, Biovail Corporation - from $0.375 to $0.09 per share, quarterly

   CLF, Cliffs Natural Resources - from $0.0875 to $0.04 per share, quarterly

   CSFL, Centerstate Banks of Fla. - from $0.04 to $0.01 per share, quarterly

   REG, Regency Centers - from $0.725 to $0.46 per share, quarterly

   SLG, SL Green Realty Corp. - from $0.375 to $0.10 per share, quarterly

   SSS, Sovran Self Storage - from $0.64 to $0.48 per share, quarterly

   SXI, Standex International - from $0.21 to $0.05 per share, quarterly

   TM, Toyota Motor Corp. - from ¥140 to  ¥100 per share, annually