The quarterly dividend was slashed from $0.50 per share to $0.02 per share. It was raised to $0.05 per share in the most recent quarter, but it is still 90% below where it stood at the beginning of the year. Prior to the cut, I determined that the company's then-11% yield was not worthy of forgiveness. My doubt was well-placed, and its "F" dividend safety rating was well-deserved. Invesco Mortgage Capital remains an "F." A week later, I reviewed one of the most requested stocks in this column, Annaly Capital Management (NYSE: NLY). At the time, it had a 9.9% yield. Similar to Invesco Mortgage Capital, it had a nasty history of dividend cuts, including in the prior year. Even worse than Invesco's situation, its net interest income, which is how we evaluate mortgage real estate investment trusts (REITs) like Annaly, had been falling every year for years. This year was supposed to be different... But a near decade of terrible performance both from an operational standpoint and a dividend perspective made SafetyNet Pro give Annaly the lowest grade possible. That lack of confidence was rewarded when Annaly lowered the dividend once again to $0.22 from $0.25 - its 12th cut in 11 years. Annaly Capital Management remains an "F." In October, I wrote about NGL Energy Partners (NYSE: NGL), a company that had already reduced its dividend in 2020 but still had an exorbitant 20% yield. Not for long... I warned that the company's distribution far exceeded its cash flow. And with its high level of debt and a couple of recent cuts, the distribution could not be considered safe at all. Sure enough, three weeks later, NGL Energy slashed its distribution in half to $0.10 from $0.20, which is still a sky-high 14% yield. Look for another drop in the distribution within the next year or so, as the stock maintains its "F" rating from SafetyNet Pro. These three stocks were dogs in 2020, and SafetyNet Pro could have helped you avoid the wreckage. Be sure to check this column every Wednesday as I review which stocks have dependable dividends and which ones are likely to leave a lump of coal in your portfolio. I wish you a very merry and safe Christmas. Good investing, Marc |
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