# Impact on dividends



## jimmm (Jan 2, 2019)

Quick question for the veteran investors on this forum - When we see a dip in the markets (say, 20%), does this typically impact dividend payouts? I realize there may be no "typical" answer, but any insights would be appreciated.
I'm a few years from retirement, and I track the dividends I am collecting today; primarily from CDN and US total market ETF's. I'm thinking about how much variance I can expect to see in this dollar amount once I am relying on it as part of my annual income.


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## doctrine (Sep 30, 2011)

In the indexes, there could be a dip in dividends, especially if this recession extends beyond a few quarters. However, any dip will likely return in a few years or even start to grow. In 2008-09, there was definitely a freeze and some cuts in the vast majority of dividends for several years. Companies won't begin to raise them until they have confidence in the business outlook, which is clearly not present now. 2010-2011 was when dividends started to go up again. 

Some individual companies, though, had a much harder time. Manulife, one of the biggest financial companies in Canada in the 2000's, suffered greatly and had to cut their dividend and raise new capital, diluting shareholders. It took them 10 years to restore the dividend fully - it just happened last quarter.


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## Money172375 (Jun 29, 2018)

BCE’s appears safe.









BCE has 'no change in plans' for dividend amid COVID-19 crisis: CEO - BNN Bloomberg


The chief executive of BCE Inc. acknowledged Friday that the giant telco isn't immune to COVID-19's impact, but he struck a confident tone that shareholders won't see any change to the company's dividend policy.




www.bnnbloomberg.ca


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## gardner (Feb 13, 2014)

I think it will depend a great deal on the business. I would be amazed if Suncor doesn't pull back. The major utilities and staples like Loblaw may not be affected at all. I expect there will be a lot in the middle where they will reduce for a few quarters until the dust settles, but wind up back at par within a year. I think we're still at the beginning of the disruption, so it's early to speculate on the long term effects.


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## milhouse (Nov 16, 2016)

I think it depends on the situation and how one's configured.
A bear market (ex -20% drop) doesn't necessarily mean an impact to dividends. However, bear markets are frequently a precursor to an economic slowdown/recession. If companies aren't making money or growing their profits, that's going to impact dividends. Looking at the situation today, with many businesses unable to operate, a number are either cutting or suspending their dividends. Technically, we aren't in a recession yet (2 quarters of negative growth) but it's pretty much foregone conclusion. I can't see how that won't impact the dividends being paid out by broad market etf's. But I'm not sure of a great way to be able to estimate potential dividend variance to sketch out retirement income. Who can predict how long dividend cuts and suspensions will last or how broad the impact will be?
Alternatively, some people (me included) have manually built a dividend portfolio with an emphasis on companies in sectors that are less likely to cut their dividends: Utilities, banks, pipelines, consumer staples, etc. People will hopefully still pay their electricity bill, phone bill, buy food, etc, during a recession. I can't recall the last time a CDN bank cut their dividends, though they have paused their growth and other financials like MFC, a lifeco, cut their divvies during the 2008 recession. Note: I don't necessarily recommend this route as it does lack diversification, leaving one susceptible to sector shocks, individual companies running into issues, etc.


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## AltaRed (Jun 8, 2009)

Equity ETFs during an economic recession most likely will see a dip in distribution payouts simply because of the number and type of holdings they contain. How much will vary by type of ETF and its constituents, how many holdings raise dividends and how many have to cut their dividends. A dividend ETF based on dividend growth stocks like Dividend Aristocrats may have a relatively small reduction in distribution payouts due to the robustness of the holdings. Others like XEI that are based more on yield (and a higher dividend payout ratio) have some lower quality holdings that have no choice but to cut dividends.

I expect all of my ex-Canada ETFs like VTI, XEF, etc. to have a dip in distribution payouts. How much depends on how deep and long the current economic downturn lasts BUT I make an assumption that a 25-30% cut overall is not out of the question for a year or two. In my individual Canadian stock holdings, only one stock so far, NFI, has cut its dividend in half and that is perfectly understandable. They've had to close much of their manufacturing capacity laying off workers and perhaps many of their customers will cancel bus orders. I expect there will be a few others, but if the economy kicks back in by the end of this year, I'd hopefully not see more than about a 10'% near term cut in dividends in my Cdn stocks. Perhaps 20% at the outside. Time will tell.

.


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## jimmm (Jan 2, 2019)

My thanks to everyone for their input on this. Sounds like a 30% reduction is a worst-case short-term scenario to plan for. This helps me estimate how much of my current dividend payout I can count on as being "very likely". Of course, not guaranteed in the same way as a DB pension or an annuity...


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## AltaRed (Jun 8, 2009)

I wouldn't call 30% reduction worst case. Worst case could be like the Great Depression with a 70% decline in the Dow Jones from peak. Consider 30% more like the far end of the likely range, and dependent on how soon the recovery occurs. Companies will try to hold on as long as they can without killing their balance sheets, so the sooner a recovery takes hold, the less severe will be the depth of dividend cuts.


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## doctrine (Sep 30, 2011)

AltaRed said:


> I wouldn't call 30% reduction worst case. Worst case could be like the Great Depression with a 70% decline in the Dow Jones from peak. Consider 30% more like the far end of the likely range, and dependent on how soon the recovery occurs. Companies will try to hold on as long as they can without killing their balance sheets, so the sooner a recovery takes hold, the less severe will be the depth of dividend cuts.


The main difference between now and previous depressions is quantitative easing. The effect is really unknown of course but yes I think 30% cut in index dividends is probably a worst case scenario. I would say the most likely scenario is less than half of that. Don't fight the fed.


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## gardner (Feb 13, 2014)

AltaRed said:


> I wouldn't call 30% reduction worst case.


Me neither. Bargaining on a 30% reduction in dividend yield overall, I think, is optimistic. IPL just reduced by 73%. I picture a some companies completely turning off the taps, maybe for 2 or 3 quarters and even then reducing by 30% or 50% when they come back on stream. My guess is that a 70% reduction is possible for 2020.


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## andrewf (Mar 1, 2010)

Stock markets have gone to zero before (usually requires some sort of revolution), so that is the worst case. Now, I don't think that is likely to happen here, but people need to not kid themselves about 'worst cases'.


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## agent99 (Sep 11, 2013)

Cross post from another site:
*



ECB recommends that banks skip dividends until October

Click to expand...

*


> Announced last Friday in case anyone missed this.
> "The European Central Bank (ECB) today updated its recommendation to banks on dividend distributions. To boost banks’ capacity to absorb losses and support lending to households, small businesses and corporates during the coronavirus (COVID-19) pandemic, they should not pay dividends for the financial years 2019 and 2020 until at least 1 October 2020. Banks should also refrain from share buy-backs aimed at remunerating shareholders."
> 
> ECB asks banks not to pay dividends until at least October 2020
> ...


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## AltaRed (Jun 8, 2009)

Clearly, International ETFs like VXC, XAW, VEA, etc. will see lower yields at the next distribution. Really don't know what the references to 2019 are about since that is water under the bridge.....unless a 2019 fiscal year doesn't end until, for example, March 31. Which means VGK, which I own, will have a smaller distribution in June (just got most recent one this past week).


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## james4beach (Nov 15, 2012)

If banks encounter capital problems due to all this (bad loans) it's possible the banks will have to stop paying dividends to preserve capital. This was one of the decisions in the regulatory regime after the 2008 bailouts. The next time around (and that could be now) banks might be required to stop paying dividends until their capital positions improve.

Previously, in 2008-2009, Canadian banks were given generous emergency funding when they were on the brink of insolvency. They still kept paying dividends... quite reckless!

If there's a repeat of the situation, investors should be ready for the possibility that banks stop dividends. Agent99 already posted something like that above, and there's also talk in the US for the same.

It's simple: companies in severe liquidity distress should not be wasting money on dividends.


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## agent99 (Sep 11, 2013)

james4beach said:


> If there's a repeat of the situation, investors should be ready for the possibility that banks stop dividends. Agent99 already posted something like that above, and there's also talk in the US for the same.
> 
> It's simple: companies in severe liquidity distress should not be wasting money on dividends.


After reading that ECB post, owning a lot of dividend stocks, I am in kind of a dilemma.

Maybe Canadian Banks are more resilient. Bank of Canada did a study last year that concluded they could handle a major recession (I need to find the link, but it was based on something like 8% drop in GDP, 12% unemployment, 40% drop in housing in bubble markets (I will try and confirm those numbers) Not sure they addressed ability to pay dividends. Actually they did. *This is the report,* My rough numbers above are close to the ones they used. Remember, this was just a study - they didn't predict those numbers and they could not have possibly known how soon they would be tested.

What happens to share prices if companies cut or stop their dividends ? Well we know that, and IPL today is a good example. They will tank further.

Should we get out now, rather than later, and put aside proceeds for living expenses (to replace the lost dividends)? Better now than after announcements that cause share prices to drop further? Thinking, maybe for shares, other than banks and other blue chips that should bounce back even if they do cut dividends.

Maybe buy some cumulative preferreds from blue chips?
1 - 2yr GICs to store cash for future living expenses?

This is a time when us retirees living off our savings, we envy those with pensions !


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## cainvest (May 1, 2013)

agent99 said:


> What happens to share prices if companies cut or stop their dividends ? Well we know that, and IPL today is a good example. They will tank further.


I thought IPL would drop much more than they did on that news and also oil right at $20/barrel right now.


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## AltaRed (Jun 8, 2009)

OSFI relaxed Tier 1 capital requirements and CMHC has just bought a shitload of insured mortgages to provide banks more capital flexibility on their balance sheets. I don't see dividend decreases in the big 5 UNLESS the government has to inject real money into the banks and that is not supposed to happen unless common equity share prices drop to $5 and all the NVCC compliant prefs are converted to common equity first. On the same token, they would not dare cause anger by raising them either.

I'd watch the 2nd tier and alternative lenders closely. Once loan losses start to take off later in 2020, some of them may not survive.


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## agent99 (Sep 11, 2013)

cainvest said:


> I thought IPL would drop much more than they did on that news and also oil right at $20/barrel right now.


Some of the drop was likely already built in. Probably is for PPL too.

IPL was at $11.00 only 3 trading days ago. 

I think WCS is now just over $6.00. Desperate times for oil industry.


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## james4beach (Nov 15, 2012)

Several large banks in the UK are cancelling their dividends this morning
UK banks agree to scrap £8bn dividends amid recession fears
Markets slide as UK banks cancel dividends and factories slump - business live



> Late last night HSBC, Royal Bank of Scotland, Standard Chartered, Barclays and Lloyds Banking Group axed their outstanding 2019 dividends, to protect their cash reserves.
> 
> They have all agreed not to make dividend payments in 2020, and to suspend share buybacks, in a flurry of co-ordinated announcements.


IMO there's a high probability that Canadian banks (yes even the Big 5) could suspend dividends this year. I think one of the problems in Canada is _overconfidence_ in banks and lack of awareness of their tenuous financial condition. That could result in a rather large emotional hit to investors who get surprised. That emotional hit / surprise is not as severe in other parts of the world (US & Europe) because they are pretty aware that their banks aren't so solid.


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## james4beach (Nov 15, 2012)

I also think it's reckless of the CIBC CEO to say there will be no dividend cuts:
No dividend cuts as 'reliable income incredibly important' amid pandemic: CIBC CEO - BNN Bloomberg

How dare he say that he refuses to protect the capital position of the bank? This is basically a big middle finger to shareholders and depositors! If the CEO is not committed to protecting the bank as a going concern, he's not protecting the shareholders interests.

If Victor Dodig is not going to protect the shareholders and depositors, he should be fired -- _immediately_.


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## Money172375 (Jun 29, 2018)

Part of Dodig’s argument is that he doesn’t want to take away a source of income for Canadians. Obviously the dividend stream is important to many. I’m Not informed enough to have my own opinion...just sharing what Dogid said.


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## agent99 (Sep 11, 2013)

But James, other than you, who says the shareholder and depositers will be at risk? Bank of Canada has quite recently studied the resilience of our banks in a situation just like we are having. They found them to be resilient. If anything, perhaps a slight reduction in dividends may be required to maintain required reserves in what they considered a worst case scenario. Admittedly, we don't know where current one is going - it could be less or more severe.









Assessing the Resilience of the Canadian Banking System


The stability of the Canadian financial system, as well as its ability to support the Canadian economy, depends on the ability of financial institutions to absorb and manage major shocks. This is especially true for large banks, which perform services essential to the Canadian economy.




www.bankofcanada.ca


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## birdman (Feb 12, 2013)

Money172375 said:


> Part of Dodig’s argument is that he doesn’t want to take away a source of income for Canadians. Obviously the dividend stream is important to many. I’m Not informed enough to have my own opinion...just sharing what Dogid said.





james4beach said:


> I also think it's reckless of the CIBC CEO to say there will be no dividend cuts:
> No dividend cuts as 'reliable income incredibly important' amid pandemic: CIBC CEO - BNN Bloomberg
> 
> How dare he say that he refuses to protect the capital position of the bank? This is basically a big middle finger to shareholders and depositors! If the CEO is not committed to protecting the bank as a going concern, he's not protecting the shareholders interests.
> ...


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## birdman (Feb 12, 2013)

Does it really make a difference whether or not they pay the dividend providing the total capital position is not "materially" impacted. Theoretically, if the bank paid out dividends in excess of earnings the value of the shares would simply decrease. Canadian banks are strictly regulated and I believe all, at least the big 5, have a comfortable margin of equity above the required minimums. Furthermore, I am sure the banks have internal policies dealing with the relationship of share capital and retained earnings in the make up of total equity. No doubt they ensure they stay well onside of this ratio then they can still pay dividends when profits are down or losses occur. Personally I am not concerned. The Big 5 have paid dividends for over 100 years.


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## birdman (Feb 12, 2013)

frase said:


> Does it really make a difference whether or not they pay the dividend providing the total capital position is not "materially" impacted. Theoretically, if the bank paid out dividends in excess of earnings the value of the shares would simply decrease. Canadian banks are strictly regulated and I believe all, at least the big 5, have a comfortable margin of equity above the required minimums. Furthermore, I am sure the banks have internal policies dealing with the relationship of share capital and retained earnings in the make up of total equity. No doubt they ensure they stay well onside of this ratio then they can still pay dividends when profits are down or losses occur. Personally I am not concerned. The Big 5 have paid dividends for over 100 years.


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## birdman (Feb 12, 2013)

Further to my above post attached in an article providing the long history of companies that have paid divies for over 100 yrs:








Revealed: These 8 Stocks Have Paid Dividends for at Least 100 Years


Stocks such as Imperial Oil Limited (TSX:IMO)(NYSE:IMO) and BCE Inc. (TSX:BCE)(NYSE:BCE) are true dividend legends.




www.fool.ca


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## milhouse (Nov 16, 2016)

G&M roundup article by Scott Barlow references Citi's Tobias Levkovich report on US dividend stocks that estimates at 30% dividend drop based on a projection of a 24% 2020 EPS slide of the S&P500. Also noted was that companies taking loans via the CARES Act stimulus package would not be allowed to do stock buybacks or pay dividends for a year post paying back the loan. Sectors of concern cited were energy due to profitability issues and real estate due to possible rent payment issues.


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## milhouse (Nov 16, 2016)

Oops, here the link but it's behind a paywall: ‘Dividend risks abound’


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## agent99 (Sep 11, 2013)

Noticed A&W eliminated their dividend. A&W Revenue Royalties Income Fund Announces Temporary Suspension of Monthly Distributions Due to the Impact of COVID-19 - Apr 1, 2020

Not surprising really even although they don't actually operate the restaurants. They just collect a % of sales based on use of the trade mark. A&W Revenue Royalties Income Fund > About the Fund


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## AltaRed (Jun 8, 2009)

That suspension is to be expected. Negligible royalties from negigible sales means negligible payout. Every royalty, or high income, play out there will either suspend entirely, or at least severely cut, distributions.


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## milhouse (Nov 16, 2016)

I don't consider the CIBC comment about no dividend cuts being reckless when paired with a comment that the "Canadian banking sector is incredibly well capitalized." BMO's and BNS' CEO's also weighed in with comments "system have lots of capacity" to swallow loan losses and "ample capital" to serve as a cushion. Sure, they could be blowing smoke up our asses but at this point, I don't see a enough evidence to doubt them. Granted, don't expect dividend increases from the banks this year, which makes me wonder about previous growth guidance by ENB, TRP, T, FTS, etc.


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## agent99 (Sep 11, 2013)

james4beach said:


> Several large banks in the UK are cancelling their dividends this morning
> UK banks agree to scrap £8bn dividends amid recession fears
> Markets slide as UK banks cancel dividends and factories slump - business live


Another link. UK Banks Scrap Shareholder Distribution: US to Follow Suit?

Definitely cause for concern for those of us who rely on those dividends for income. Other than GICs or gov bonds, not much we can be sure of maintaining income flow from these days  

Even utilities. If people wont be able to pay rent, then they probably won't be able to pay for utilities either. Will government bail them out too? Companies that have had to close for extended time - will they need and be able to pay for utilities? 
Thinking that FTS, CU, EMA etc may not be as safe as they seem?


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## Rusty O'Toole (Feb 1, 2012)

Stock price and dividends are related but they are not connected. In other words, a stock's price can rise or fall for reasons that have nothing to do with the dividend, in fact, there have been times when stock prices fell while earnings and dividends were increasing.

On the other hand, a company's earnings can affect both the price of the stock and the dividend. Often earnings fall first, while the stock price can start to fall even before the public announcement of earnings. Meanwhile they can continue to pay the same dividend out of savings, and sometimes even borrow money to keep up dividends. You sometimes see stocks with very attractive dividend percentage yield for this reason but usually, they end up cutting the dividend and ending in even worse shape.

In today's market I expect to see falling earnings for most companies and eventually they will have to cut dividends. The market has already anticipated this to some extent although where it will all end, who knows.


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## AltaRed (Jun 8, 2009)

May want to read Income funds sift for survival to get a feel for what kind of haircut might be coming by the end of 2020. Numbers like 30-45% distribution cuts on International and US market indices being thrown around .Canada won't escape entirely, and less so for high income funds.

Of course no one knows but it pays to be forewarned.


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## agent99 (Sep 11, 2013)

Another Alberta oil related dividend cut today:

*



Dividend suspension

Click to expand...

*


> Cenovus had based its ability to provide a sustainable dividend from free funds flow on a West Texas Intermediate (WTI) price environment of US$45/bbl. In the context of recent commodity price forecasts and economic, market and business conditions in the oil and gas industry, Cenovus has decided to suspend its quarterly dividend.


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## milhouse (Nov 16, 2016)

G&M article referencing Goldman Sachs note warning of 25% reduction in S&P500 dividends in 2020.


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## MrMatt (Dec 21, 2011)

This is going to be a rough time. 
The problem is everyone is too highly leveraged, and can't cope with this. 
The debt crisis, along with an overall economic crisis, and a health crisis at the same time, all feeding into each other.

People can't pay their bills, they have no income, they have no savings. 

There really isn't much that can be done except for the government to 
1. Print money and bail everyone out with massive debt and inflation.
2. Let individuals skip out on their unpaid bills. 

As bad as #1 is, I think #2 is worse, they're courting economic chaos.

There is going to be a massive wave of bankruptcies during this, Utilities and rent simply won't get paid.
What happens when a substantial portion of the landlords default on their mortgages? Or utilities don't get a significant number of their bills paid.


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## Thal81 (Sep 5, 2017)

This is perhaps the perfect storm for dividend growth investors. The "dividends don't go down during recessions" credo will be put to the test when so many companies have little to no revenue with which to pay dividends...


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## MrMatt (Dec 21, 2011)

Thal81 said:


> This is perhaps the perfect storm for dividend growth investors. The "dividends don't go down during recessions" credo will be put to the test when so many companies have little to no revenue with which to pay dividends...


Who said that?
I think it's a silly thing to say. Also while we might be in a "recession".
We're actually in a government mandated economic shutdown, and a global depression.

The real economic damage is from the government turning off much of the economy. I believe this is appropriate, but the shutdown is causing the damage more than merely financial/economic issues.

That's why the "stimulus" is a misnomer, they're not stimulating anything because there is very little left to stimulate.


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## james4beach (Nov 15, 2012)

Stock prices and dividends are in fact correlated, though weakly. I've done a historical study of this. In periods where the S&P 500 contracted significantly, the dividends did as well.

Here was my earlier study on this: Historical dividends during turbulent markets

For example it shows a 60% cut in dividends during the Great Depression. And other cuts in subsequent recessions such as 20% dividend reduction in 1969-1982.

One has to remember that both dividends and share price returns originate from the same place: profits. That's why they are correlated. Dividends have a bit more flexibility to them since the companies try paying them as long as they possibly can, so yes, it's possible for share prices to tank while dividends keep coming.

But generally, crashing prices are not good news for dividend investors. The prices are crashing because earnings are crashing. Dividends are not free money; they are just a cash transfer from the company's retained earnings account into your pocket.

If earnings stay low long enough, the dividends will stop.


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## AltaRed (Jun 8, 2009)

See my link in post #34 above on Income funds. It applies to expected large cuts in dividends and distributions. I've generally thought an overall 30% cut would be worst case, but 50% may be a more likely worst case if the economy is derailed well into the latter half of this year..


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## agent99 (Sep 11, 2013)

More companies eliminating dividends.
MTY - Montreal based with 70 franchised food brands world wide.
CAE - training for the civil aviation, defence and security, and healthcare markets.
CHR - Chorus is suspending its dividend following payment of the previously declared dividend payable on April 17, 2020 to shareholders of record on March 31, 2020 (the 'March 2020 Dividend')


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## james4beach (Nov 15, 2012)

I hold some CAE in my growth portfolio. Notice it did not fall on the news... probably because it paid a small dividend to begin with and therefore doesn't have dividend yield chasers loaded into the stock. This is an advantage of owning low dividend stocks.

In comparison, high dividend stocks could be in a kind of bubble where investors have bid their prices up over the years while they chase yields. Wouldn't it be ironic if, all these years talking about the safety of dividends, those dividend investors have in fact over-priced all the major dividend stocks and therefore left themselves more vulnerable to sharp drops upon dividend cuts / cash crunch?

In fact CAE and CHR offer a case study in this because they are in the same sector and both announced dividend cuts today. CAE (low dividend) is up 8.5% whereas CHR (high dividend) is *down 5.9%*. That's a huge difference in response.


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## agent99 (Sep 11, 2013)

Your comparison is a bit of a stretch. Quite different businesses. Cae a leader in their field which is training and simulators, chr just a regional airline. 
55% drop in your growth stock since Jan must be kind of tough to take. Amazing how hard and quickly some companies are getting hit.
Some dividend stocks, like the utilities are so far doing reasonably well. Happy to own aqn, FTS, ema as well as telecoms bce & T. Banks not so good. These are the kind of stocks to compare with zero or low div "growth" stocks.


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## james4beach (Nov 15, 2012)

agent99 said:


> 55% drop in your growth stock since Jan must be kind of tough to take. Amazing how hard and quickly some companies are getting hit.


Now I'm curious how much my growth portfolio (all which have low dividends) has been hit, compared to the index. These are minor positions compared to my 5-pack, but stock picking has been kind of fun, so I've kept it up.

2020 YTD figures:
My growth stocks ... -15.7%
XIC ... -19.5%
XDV ... -21.4%

Note that my growth stocks don't include any energy companies. My screening process includes looking at the chart's technical strength, and that excluded all energy.

Maybe I just got lucky, but my low dividend / growth / momentum stocks have been outperforming the TSX index this year so far. Apparently, this market crash hasn't destroyed my picks, even though many of them are growth / momentum stocks.


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## agent99 (Sep 11, 2013)

Thanks to recent market uptick, our overall portfolio is down just 16.3% from Dec 31st high. This includes everything except small amount of cash in bank accounts.

Looking at the money that governments ,including our own, are dishing out, dividend cuts this early, etc, it is hard to see markets holding up or economy recovering in years from now. I would not be surprised to see our portfolios at 1/2 their Jan 1st levels.

I at present have about 20% in cash or GICs - probably 25% in a month or two as some bonds mature. Hopefully enough to ride out the storm should our dividend income drop drastically.
By staying at home, a drop in living expenses might be expected. But not much when we dial in quarterly tax installments, property taxes, Utility bills, Food.

It's not a time to fool around. I am trying to minimize risk. I won't be selling any of our major holdings - banks, utilities, telecoms and one or two others. All dividend stocks that we have held for a long time.

As we get through this, I expect we will see infrastructure spending to provide jobs and kick start the economy. Like the New Deal in USA. Some of the famous US golf courses were built as part of the New Deal. FDR was an avid golfer (as is the current President). Maybe history will repeat itself  In any event, we may have a little time to think about which companies will benefit from infrastructure spending, and move some cash there, when appropriate.


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## cainvest (May 1, 2013)

agent99 said:


> Thanks to recent market uptick, our overall portfolio is down just 16.3% from Dec 31st high. This includes everything except small amount of cash in bank accounts.


Had to pay some bills so did a quick check this morning, overall down ~10% from early February. Without my purchases in March I'd probably be down in the 15-17% range. Of course this is all far from over ...


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## milhouse (Nov 16, 2016)

Shaw's reporting _their_ Q2, which ended Feb 29, tomorrow. While most of the damage came in March, the Q&A might give some insight on how the communication companies are doing with a preview to Rogers reporting in 2 weeks and Bell and Telus who report at the end of the first week in May, all of which include March in their latest quarterly numbers and, specific to this thread, how safe/at risk their dividends are.


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## agent99 (Sep 11, 2013)

milhouse said:


> Shaw's reporting _their_ Q2, which ended Feb 29, tomorrow. While most of the damage came in March, the Q&A might give some insight on how the communication companies are doing with a preview to Rogers reporting in 2 weeks and Bell and Telus who report at the end of the first week in May, all of which include March in their latest quarterly numbers and, specific to this thread, how safe/at risk their dividends are.


With people stuck at home, you would think that phone/internet/tv would be one of the last things to be hurt. 

I imagine reports from various other sectors for 2nd quarter might be a big problem for markets.


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## Eder (Feb 16, 2011)

Telus,Rogers & BCE were all down graded today...which most likely means they are doing just fine and offer a good entry point.
I'm thinking of dumping my Rogers as they seem hesitant to ride the dividend increase train. Think I'll wait till they report the upcoming quarter though.


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## AltaRed (Jun 8, 2009)

All the telecoms removed their data overage penalties for this crisis so that source of revenue is gone.

Content is also gone such as sports on TSN and Sportsnet. Advertisers are not going to pay standard rates for reruns of shite from 3 years ago.

Advertisers themselves have no reason to advertise on Bell media et al if they are shut down. Ad revenue must be way down.

Revenue should be up from upgraded installations for 'work from home' employees. May not be enough to offset the declines.


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## agent99 (Sep 11, 2013)

Apparently, a total of 18 S&P 500 companies have announced dividend cuts since March 1, according to Bank of America Global Research. More gloomy dividend news here (US related):









Coronavirus pandemic may put an end to dividends


Dividends are at risk in a big way as Corporate America sees a major profit and cash squeeze amid the coronavirus pandemic.




finance.yahoo.com


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## james4beach (Nov 15, 2012)

Bloomberg has an article on dividend impacts / forecasts in Canada:
In a Profit Black Hole, Canada Dividends Head for Chopping Block

They think the sectors greatest at risk are
Energy ... -28% dividend growth
Communication ... -12%
Industrials ... -12%
Plus REITs, though they don't show a number

But they have positive projections for Financials mainly based on the confidence of bank CEOs that they won't have capital shortfalls. I personally think this is overoptimistic heading into a potential Depression, and I think bank management has a poor track record in forecasting their financial condition (example: 2008)

At the end of the day, a well diversified dividend investor (like any well diversified stock investor) should do the best. Dividend investing makes it more challenging to maintain good sector diversification, but it's possible to do. For example I like CDZ for its sector diversification.


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## cainvest (May 1, 2013)

james4beach said:


> For example I like CDZ for its sector diversification.


It'll be interesting to see how CDZ does. They dropped from .103 to .90 in Oct 2019 then raised in Jan 2020 to .94.


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## milhouse (Nov 16, 2016)

Summary from the Shaw call and news release:
They're withdrawing full year 2020 guidance as there's too much uncertainty around how the pandemic stuff will play out. The oil situation and its impact on Alberta is also going to create headwinds for them on the business customers side.. On the consumer side, there's not a lot of activity in gaining customers nor disconnecting customers. Correspondingly, they're managing financials as they reduce travel costs, marketing and promotion costs, likely reduce capital spend activity, and suspend NCIB activity. They feel confident with their cashflow its ability to sustain current dividend yields.
Based on the call, it sounds like to me their dividend is safe but there won't be any increases in the near term.
Looking forward to RCI, BCE, and T, I suspect they'll be pretty static as well, tho media/sports may be hurting as TSN is laying off/forcing vacation on staff and T will likely also be a bit bruised from Alberta woes. In addition to lost data overage revenue as AR points out, they are also losing out on roaming revenue with all the travel restrictions. I think they have enough levers to pull, as SJR described, to manage costs though.


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## james4beach (Nov 15, 2012)

cainvest said:


> It'll be interesting to see how CDZ does. They dropped from .103 to .90 in Oct 2019 then raised in Jan 2020 to .94.


Part of the complication there is that those distributions include capital gains. Each distribution from CDZ, XDV, etc is a mix of dividends + capital gains.

When stocks weaken, the capital gains part can disappear but that doesn't mean the dividends will. The important part is the dividends. Looking at the iShares CDZ page, under Distributions, then Calendar Year, look at the *Eligible Dividends* column.

Starting from 2007, that shows pretty good stability but there are some declines. I could see the CDZ dividends dropping to maybe $0.90 a share (annual) just eyeballing this graph I made from the fund's data:


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## cainvest (May 1, 2013)

Here's the recent dividend only amounts ... they do fluctuate a bit.


03/25/20​0.094​02/24/20​0.094​01/27/20​0.094​12/30/19​0.090​11/26/19​0.090​10/25/19​0.090​09/24/19​0.103​08/26/19​0.103​07/25/19​0.103​06/19/19​0.090​05/24/19​0.090​04/24/19​0.090​03/25/19​0.094​02/22/19​0.094​01/25/19​0.094​12/28/18​0.090​11/27/18​0.090​10/25/18​0.090​09/19/18​0.109​08/27/18​0.109​07/25/18​0.109​06/25/18​0.094​05/25/18​0.094​04/24/18​0.094​03/23/18​0.075​02/22/18​0.075​01/25/18​0.075​12/28/17​0.077​11/22/17​0.077​10/25/17​0.077​


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## agent99 (Sep 11, 2013)

james4beach said:


> For example I like CDZ for its sector diversification.


I don't like ETFs in general. CDZ holds 96 different companies. IMO, too many. Better to hold individual stocks unless you are small investor. Choose your own diversification and don't get sucked into thinking ROC is a dividend.

CDZ is down 23.76% YTD. Other DIV ETFs probably no better. Worse than say XIU, probably because those ETFs hold a lot of smaller companies that have probably been hit harder.

If companies decide to cut dividends and instead, retain earnings, this could actually help, or at least not hurt, the share prices? Those dividend stocks we own may become growth stocks


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## AltaRed (Jun 8, 2009)

Personally, I don't like CDZ due to number of holdings and its MER but regardless, any ETF will have variable distributions on a month/quarterly basis for reasons already noted. 

J4B's graphical representation of eligible dividends for CDZ over the last financial crisis is likely representative of what will transpire in the current crisis, albeit I expect the dip this time around to potentially be more severe. Even the dividend portfolios of stock pickers will show some declines.


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## dubmac (Jan 9, 2011)

I hold CDZ, & agree it is a mediocre holding, but, it does what I want it too. Good, well managed stocks have done better than CDZ, as mentioned by agent above.
The top 10 holdings for CDZ include the following (based on what I can find) & account for about 22% or so of total:

Inter Pipeline Ltd - cut their distribution by 72%. 
Alaris Royalty Corp - Stock is down to around 9.5 from 22.5 or so (-60%). couldn't find any reference to a cut.
NFI Group Inc - stock down like everything else - does mention that current env. "may affect its ability to fund dividend"
TransAlta Renewables Inc - actually doing OK. 6-month chart is green, not red!
Fiera Capital Corp - stock down around 40%. no sign yet of changes, yield in the 11% range. yipe.
Enbridge Inc - yield is around 8%. stock down around 25% or so. no mention of cut..yet.
Transcontinental Inc Class A - yield around 7%, no cut that I can see,
SmartCentres Real Estate Investment Trust - yield is 8%. 
Capital Power Corp - yield around 6.7%.
Cineplex Inc - I think they halted dividends. have you been to a movie recently? newsfeed said: Cineworld halts dividend & says will monitor the progress of its buyout of cineplex"

On Yahoo, 
CDZ down -31%. yield is 4.16%
XDV down -23%, yield is 4.48%

I remember someone on this forum referred to as CDZ as the Dividend Proletariat (not Dividend Aristocrat)...seems to be true!


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## agent99 (Sep 11, 2013)

james4beach said:


> Starting from 2007, that shows pretty good stability but there are some declines. I could see the CDZ dividends dropping to maybe $0.90 a share (annual) just eyeballing this graph I made from the fund's data:


The graph is interesting. What I see, is that eligible dividends generally increase. That is what the aristocrats are supposed to be good at!

From 2006 they started their normal uptrend, but the 08/09 set them back to their pre-08 level. Not too bad considering. 

After that they had above normal growth during the post 09 strong bull session. Then some small pull backs, but generally onwards and upwards. 

Question is - what happens in 2020/2021. Some smaller companies and some sectors among those 96 stocks in CDV could hurt the etf's overall performance. Same with ZDV that I have just a small amount of.


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## Eder (Feb 16, 2011)

Don't know if this link has been posted already, but I mostly agree with Heinzl. 









How safe are dividends in my Yield Hog model portfolio? Let’s take a look


One of the model portfolio stocks, A&W Revenue Royalties Income, temporarily suspended its monthly distribution this week. No other stocks in the portfolio have cut their dividends yet and, while nothing is guaranteed, I am hopeful that most of the payouts will be maintained




www.theglobeandmail.com


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## agent99 (Sep 11, 2013)

Eder said:


> Don't know if this link has been posted already, but I mostly agree with Heinzl.
> 
> 
> 
> ...


That link, like most from G&M, does not work for those who do not subscribe. A subscriber could, I guess, cut and paste an article.


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## Eder (Feb 16, 2011)

I'll put a bit of it here....I think the banks everyone knows the big 5 will stand pat anyway....I'm mostly interested in my BCE/Telus ...looks like I'll still be eating fairly high on the hog for the foreseeable future as I suspected.

*Power, utilities and pipelines*

Power producers, utilities and pipelines provide essential services, and they benefit from earnings that are either regulated or contracted on a long-term basis. This predictability gives their dividends a high degree of stability, even during tough economic times. “We believe the historical trend of dividend stability and regular annual growth is likely to continue for the vast majority of the companies that we cover,” RBC analyst Robert Kwan said. The eight power, utility and pipeline stocks in my model portfolio all received a dividend stability rating of “high” from RBC. They are Algonquin Power & Utilities Corp. (AQN), Brookfield Infrastructure Partners LP (BIP.UN), Canadian Utilities Ltd. (CU), Capital Power Corp. (CPX), Emera Inc. (EMA), Fortis Inc. (FTS), Enbridge Inc. (ENB) and TC Energy Corp. (TRP).



*Telecom *

During the pandemic, people are still using their cellphones, surfing the internet and watching TV – perhaps more than ever. What’s more, “all Canadian telecom operators have strong balance sheets and substantial access to liquidity,” RBC analyst Drew McReynolds said. These companies also have the flexibility to cut costs and reduce capital spending to sustain dividends in a severe economic downturn, he said. The two telecom companies in my model portfolio – BCE Inc. (BCE) and Telus Corp. (T) – earned a “high” dividend sustainability rating from RBC, as did the other major Canadian cable and wireless players.


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## agent99 (Sep 11, 2013)

Ok Thanks. I have stock, pfd or bonds by all of the companies mentioned, except BIP.UN which I have avoided. All the banks too.


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## robfordlives (Sep 18, 2014)

Have a buddy who works for bluechip utility and the amount of people asking for deferrals is massive.


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## dubmac (Jan 9, 2011)

I read that article by Kwan. 
Much of my pf is defensive. FTS, EMA, TRP, T, BCE, AQN, and banks. 
I read in the G&M today that Telus' CFO has been buying, as have a few other execs with Telus. A good sign.
I don't own BIP.UN and CPX, but I'm watching them closely. Also BAM.A


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## Eder (Feb 16, 2011)

The way I see it deferrals will just end up resulting in higher bills in the long run for those that continue to pay .


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## MrMatt (Dec 21, 2011)

Eder said:


> The way I see it deferrals will just end up resulting in higher bills in the long run for those that continue to pay .


There is a big movement from people who don't want to pay their bills at all.
Even with record low interest rates, they think it is unreasonable to pay interest on their mortgages, despite the fact they're getting 75% of their pre-COVID income

I think we're setting up for a wave of bankruptcies like we've never seen before.
The only solution is to inflate away the debt, and I'm not sure that's a good idea. It won't work for all the inflation indexed debt (ie pensions) anyway.


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## AltaRed (Jun 8, 2009)

Way too many stories from people who are now recognizing these are just deferrals. Saw a local item about a woman ranting on about the big banks....that deferred payments on her mortgage would simply be tacked on to the principal extending amortization and she'd pay interest on interest. Duh!..... What does she think? There is just going to be a 'gift' from the bank? That I, as a shareholder, should gift her 3-6 months of interest? No one should be deferring if they have the cash flow to continue business as usul.


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## Money172375 (Jun 29, 2018)

I think too Many people requested and got a deferral before details of the CERB were announced.......including my brother.


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## andrewf (Mar 1, 2010)

Let's face it, this is an almost complete non-story. If anyone is upset about the deferral, how much could it possibly cost them? $100 in interest? And if they did it without knowing the CERB details, you can always just do a prepayment with your CERB to get your amortization back to where it was...


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## Money172375 (Jun 29, 2018)

andrewf said:


> Let's face it, this is an almost complete non-story. If anyone is upset about the deferral, how much could it possibly cost them? $100 in interest? And if they did it without knowing the CERB details, you can always just do a prepayment with your CERB to get your amortization back to where it was...


I believe every lender treats them a little differently but I think it’s generally agreed that a de referral (or capitalization) will cost the average mortgage holder thousands of dollars. Some lenders add the deferred payments to the principal outstanding and charge interest on that amount for the deferral period. The banks are not simply deferring the payment in most cases. I left the industry a few years back.....wish I could give some better examples....but it was such a rare request. I did less than a handful in 20 years. Perhaps a current mortgage broker/advisor could comment Further.









Deferring your mortgage because of coronavirus could cost you - Macleans.ca


What you need to know about calculating additional interest costs and protecting your credit score




www.macleans.ca













What could COVID-19 mortgage payment deferral cost? | Ratehub.ca


While they may be necessary, mortgage deferrals aren't free. Read on to see just how much a COVID-19 mortgage deferral could cost.




www.ratehub.ca


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## andrewf (Mar 1, 2010)

Most mortgages have prepayment options (20/20), so if anyone is really worried about paying interest, they can exercise those options. Unless they wanted money for nothing. I am very sympathetic to cash flow concerns (will I be able to buy food). Wealth effects we can worry about later.


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## andrewf (Mar 1, 2010)

From that ratehub link:



> *Alternatives to mortgage deferral*
> If your income has been affected by the COVID-19 pandemic, deferring your mortgage might seem like an easy way to free up cash. However, think it over carefully because it’s an expensive type of debt, as your mortgage will continue to accumulate interest.


Am I crazy? Isn't mortgage borrowing just about the cheapest a consumer can get access to? What is the alternative for those with cashflow issues--credit card, line of credit? On what planet is mortgage borrowing considered 'expensive'?


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## off.by.10 (Mar 16, 2014)

andrewf said:


> Am I crazy? Isn't mortgage borrowing just about the cheapest a consumer can get access to? What is the alternative for those with cashflow issues--credit card, line of credit? On what planet is mortgage borrowing considered 'expensive'?


It's only the cheapest if you pay it back soon, like you would hopefully do with a credit card. If you take the deferral and don't make extra payments next year, you're effectively only paying it back at the end of the amortization. It may be only 3% but 20 years of compound interest at 3% adds up.

I don't expect most people will bother making the extra payments once they are able to. Or rather, they'll make up excuses why they can't afford to. So they will effectively be paying 20% to 80% on those deferrals.


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## Money172375 (Jun 29, 2018)

andrewf said:


> From that ratehub link:
> 
> 
> 
> Am I crazy? Isn't mortgage borrowing just about the cheapest a consumer can get access to? What is the alternative for those with cashflow issues--credit card, line of credit? On what planet is mortgage borrowing considered 'expensive'?


I believe they are referring to the cost of deferring the mortgage, not the routine or “normal days” mortgage costs. Again, I feel there is a group of people who, if they knew they were getting the CERB, wouldn’t have deferred.


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## Money172375 (Jun 29, 2018)

My brother got his paper work for his deferral. I don’t know all the particulars, but I believe his mortgage is well $200k. Deferring for 6 months is costing him $8000. That must include what would have been the original interest costs for the 6 months right? Seems excessive otherwise.

EDIT: my brother had just renewed his mortgage before all this so we can compare the before and after. Deferring his mortgage for 6 months adds about $8000 to his maturity balance in 2025. His regular pymts for 6 months totaled about $6000....so the real cost of the deferral is about $2000.

I‘ve told him to make as many payments as he can not he’s been approved for EI.....although that represents about 50% of his regular take home pay.


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## Money172375 (Jun 29, 2018)

Scotia has what appears to be a good example.





__





Defer mortgage payments | Scotiabank Canada


Submit a deferral request online. Request financial relief for your mortgage and submit a mortgage payment deferral request for 6 months.




www.scotiabank.com


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## agent99 (Sep 11, 2013)

This thread appears to have got off track! Here is a post that is actually about Impact on Dividends 

And it is a cut from a company that I do own a little of in TFSA.
*
AG Growth International*









Growth International : AGI Revises Dividend Policy; Provides Business Update | MarketScreener


WINNIPEG, April 14, 2020 /CNW/ - Ag Growth International Inc. today announced a reduction of its dividend to an annual level of $0.60 per common share. At the same time the dividend will move... | December 21, 2022



www.marketscreener.com





There have also been a number of other dividend cuts, but not for the Canadian companies many of us own. Please post if you know of or see other cuts.


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## fstamand (Mar 24, 2015)

Vermilion announced a divvy cut today.


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## agent99 (Sep 11, 2013)

fstamand said:


> Vermilion announced a divvy cut today.


Thanks. Not surprised. On BNN here: Vermilion Energy suspends dividend after two cuts - BNN Bloomberg
I luckily sold VET along with IPL and PPL in January as part of on-going de-risking of our retirement portfolio.


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## milhouse (Nov 16, 2016)

The G&M posted an article online yesterday (April 14) listing the "TSX stocks that have cut dividends since the start of the coronavirus crisis" but it's behind a paywall. The list is about. 33 companies long indicating date and cancellation or decrease. Their source is S&P Capital IQ.


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## agent99 (Sep 11, 2013)

milhouse said:


> The G&M posted an article online yesterday (April 14) listing the "TSX stocks that have cut dividends since the start of the coronavirus crisis" but it's behind a paywall. The list is about. 33 companies long indicating date and cancellation or decrease. Their source is S&P Capital IQ.


In these times, you would think someone would have such a list on-line for all of use to access.

Maybe there is one somewhere (other than behind G&M's paywall)?

OK - I did find this one. Seems up to date!









10 of The Best Canadian Dividend Stocks to Buy in December 2022 - Stocktrades


Looking for some of the top Canadian dividend stocks to add to your portfolio right now? Look no further than this list, where we've got 10 options




www.stocktrades.ca


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## londoncalling (Sep 17, 2011)

agent99 said:


> In these times, you would think someone would have such a list on-line for all of use to access.
> 
> Maybe there is one somewhere (other than behind G&M's paywall)?
> 
> ...





agent99 said:


> In these times, you would think someone would have such a list on-line for all of use to access.
> 
> Maybe there is one somewhere (other than behind G&M's paywall)?
> 
> ...



I currently hold shares or units in 31 Canadian names. 8 of the names on this list are names that I own. That is way more than I am comfortable with. 

SGY
AFN
DIV
IPL
BPF.UN
NFI
CPG
CHE.UN

yuck!

Those 8 positions make up 10.3% of my total equity portfolio. I hate to make predictions but looking at the remaining names I could easily see 3 or 4 more cuts. Overall I am down about 19% from the portfolio high this year.


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## agent99 (Sep 11, 2013)

I had sold most stocks I saw as more risky in January (Had just turned 80 and wanted to simplify portfolio). That turned out to be fortunate timing. Do still have 4 names that are on that list. But the value of those is minimal. Overall portfolio is down 16%, but that includes fixed income (some of which also dropped along with equities). I am sure portfolio will drop more before any recovery occurs. Just have to hold tight. Hopefully the blue chips will maintain their dividends.


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## agent99 (Sep 11, 2013)

agent99 said:


> OK - I did find this one. Seems up to date!
> 
> 
> 
> ...


I see that Peyto and PIzza Pizza were added to the list. That's 46 cuts now.

By the way, we received an increased April dividend from BCE - It was announce back in early February.


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## james4beach (Nov 15, 2012)

The Canadian bank CEOs insist they will not cut dividends, even as we enter a potential Depression. What if this puts the banks into a poor financial condition, which then *requires* issuance of more equity, diluting and possibly even wiping out existing shareholders.

Would the shareholders then be able to sue the bank (CEO & board) for being negligent, and wasting all that money on dividends, resulting in their tremendous losses?

I think bank investors should think twice about cheering on the dividends. You will not benefit in the long term if your equity gets wiped out. The bank will survive... your equity might not.

Remember, dividends are not "free money". They come directly from the bank's internal accounts. If the balance sheet is in bad shape, paying out dividends only makes it worse.


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## Money172375 (Jun 29, 2018)

i suppose a cut is possible if there was an Extended economic downturn. i think we’ll see a few quarters of poor economic data, but I’m hopeful things will rebound at that time. If the banks were to cut dividends to zero, the only real currency would be food and guns.


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## like_to_retire (Oct 9, 2016)

james4beach said:


> The Canadian bank CEOs insist they will not cut dividends, even as we enter a potential Depression. What if this puts the banks into a poor financial condition, which then *requires* issuance of more equity, diluting and possibly even wiping out existing shareholders.


.

The banks may not have a choice if things get worse.

This last week OSFI issued this information.

_"When there are periods of economic uncertainty or a downturn, releasing capital buffers is the first step in OSFI’s contingency plan, as it enables banks to use the funds that had been set aside. To this end, on March 13, OSFI released 1.25 percentage points, which was about 55% of the Domestic Stability Buffer and at the same time, *OSFI prohibited dividend increases and cancelled future share buybacks.* OSFI will continue to monitor institutions’ capital and liquidity levels and if conditions warrant, is prepared to release the remaining 1.0 percentage points of the buffer.

OSFI has built other contingency measures into Canada’s capital regime. Specifically, as banks move through capital layers, there are disbursement restrictions. For example, if sustaining a bank’s capital level requires it to access funds that are in the Capital Conservation Buffer, *the bank will be automatically required to restrict disbursements, including dividends and share buybacks".*_

If you read through this, you see that banks as of March 13 appear to be prohibited from dividend increases and cancel future share buybacks.

The last paragraph seems to say that if OSFI is required to move further that banks will be required to restrict dividends. That's not saying dividend increases, rather cutting dividends. 

ltr


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## james4beach (Nov 15, 2012)

It's not great that OSFI _relaxed_ capital requirements, but at least the OSFI is looking out for the balance sheet health, when the CEOs and CFOs refuse to. This is exactly why we need strong and independent regulators.

And OSFI isn't actually very independent. Too many close relationships to banks, even people hopping back and forth between them.


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## AltaRed (Jun 8, 2009)

It does not mean there is a conflict of interest. It is not unusual, indeed it is common, for the regulator's employees and decision makers o have obtained real life experience in the industry in which they regulate. You want real experience, not some executive that spent 20 years working elsewhere, e.g. for GM, in OSFI.

Generally speaking, individuals in regulatory oversight positions disclose past interests and recuse themselves from decisions involving a former employer. For example, a former VP of TD in OSFI would not involve him/herself in the oversight and decisions involving TD, but there is no reason why that individual wouldn't provide oversight and/or be part of the decision making on CIBC.

There are not spooks and conflicts around every corner.


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## Money172375 (Jun 29, 2018)

AutoCanada suspends dividend.









AutoCanada Provides Update on Actions Taken in Response to COVID-19


EDMONTON, April 20, 2020 /CNW/ - AutoCanada Inc. ("AutoCanada" or the "Company") (TSX:ACQ.TO - News) announced measures taken to enhance financial resilience in response to evolving market conditions due to COVID-19. "We are taking proactive steps that will enable us to withstand




ca.finance.yahoo.com


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## agent99 (Sep 11, 2013)

Money172375 said:


> AutoCanada suspends dividend.


That's about 44 or 45 suspended or cut now, according to Stocktrades list posted earlier. No doubt they need to cut just to survive. No big names YET.


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## james4beach (Nov 15, 2012)

For years, investors have misunderstood what dividends are, including where the cash comes from. Sadly I think we're now in an environment where people who misunderstood dividends are going to learn the lesson the hard way.

Companies can only pay dividends when they have solid financial condition. The cash is directly transferred out of the corporation's account... it's not free money. It's more like a gift to shareholders, and has direct consequences: the company is left with a worse balance sheet, and a reduction in their equity value.

Suncor pays $2.6 billion cash a year in dividends. For them to pay those kinds of dividends, they need those billions of dollars in excess cash within the corporation. If they don't have the excess cash, they can't pay the dividend.

Ultimately, dividends _are_ correlated with share prices even though people like to think they aren't. Both are tied to the company's profitability and overall health.


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## dubmac (Jan 9, 2011)

True, banks may cut dividend payments if things deteriorate deeper and longer than the present. ...
but have a look at the past 100 years tho. None of the big 5 have cut dividends that I'm aware of at least.
If they do cut them, in say in late 2020, or in 2021, then I'll eat ham sandwiches until resume.


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## james4beach (Nov 15, 2012)

Banks weren't 25:1 leveraged global derivative giants 50 or 100 years ago. They also survived to some extent by repeatedly acquiring each other and consolidating balance sheets; something that is no longer possible.

The Canadian banking environment today is completely different than it was 50+ years ago. These are now global banks with significant leverage & derivatives. I think that relying on their 100 year history is flawed reasoning; comparing apples to oranges.


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## agent99 (Sep 11, 2013)

james4beach said:


> For years, investors have misunderstood what dividends are,


Jeesh James - Not that again. You have been on that soapbox just too many times. 
Us investors do know what dividends are as do the companies that pay them. 
Give it a break.


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## dubmac (Jan 9, 2011)

I'm not relying on anything.
As others have alluded to, that banks will carry on. mortgages payments will get paid in the fullness of time - there may be interruptions (like now). Yes there will be defaults, and yes, the next year, maybe two, will likely be bumpy.
Most people will make minimum payments. That is my prediction. Not proven.
Will banks collapse? I don't think that they will - but that's my investing premise at this time. 
No one knows the answer(s).


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## cainvest (May 1, 2013)

james4beach said:


> For years, investors have misunderstood what dividends are





agent99 said:


> Jeesh James - Not that again. You have been on that soapbox just too many times.


Yes I believe most know where dividends come from, even those who didn't have "the talk" with their parents either learned on the street or CMF by now.


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## Eder (Feb 16, 2011)

I think I'd be more worried about capital gains being trimmed....


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## dubmac (Jan 9, 2011)

I saw this update on blackrock distributions
If I read it correctly, there has not been much change on CDZ's distributions


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## milhouse (Nov 16, 2016)

FWIW, RCI Q2 results, conference call, 35m:10s mark: Overall cashflow and liquidity remain strong. No plans to cut the dividend as they continue to be at the low end of their payout ratio as a percentage of their forseeable cashflow so no action needed at this time.


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## milhouse (Nov 16, 2016)

dubmac said:


> True, banks may cut dividend payments if things deteriorate deeper and longer than the present. ...
> but have a look at the past 100 years tho. None of the big 5 have cut dividends that I'm aware of at least.
> If they do cut them, in say in late 2020, or in 2021, then I'll eat ham sandwiches until resume.


The last cut I could track down (and I could be wrong) seems to be BNS in the early 40's. Outside the big 5, National Bank seems to have cut in the early 90's.


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## Money172375 (Jun 29, 2018)

GM suspends dividends and buybacks.


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## james4beach (Nov 15, 2012)

Money172375 said:


> GM suspends dividends and buybacks.


A major Australian bank, NAB, also reduced their dividend and is issuing a whole bunch of new equity, diluting existing equity holders.

Perhaps people are right that the Canadian banks will never cut their dividends, but you can be sure they will issue more equity if they need to strengthen their capital positions. Of course, ironically, those same banks could suspend their dividends and then _not have to_ issue equity.

If the banks have deterioration in their loan books, you'll feel it one way or another. Perhaps investors will celebrate the dividend remaining intact while the share price gets hammered on equity issuance.


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## Money172375 (Jun 29, 2018)

Economic 'train wreck' prompts Husky's 90% dividend cut - BNN Bloomberg


A global economic "train wreck" caused by actions to control the COVID-19 pandemic will likely continue to destroy value for some time and the only strategy is to try to minimize the damage, the CEO of Husky Energy Inc. said Wednesday.




www.bnnbloomberg.ca


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## james4beach (Nov 15, 2012)

Shell just cut its dividend for the first time since WWII. First dividend cut in *75 years*.

Shell cuts dividend for first time since 1945 amid oil price collapse


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## Money172375 (Jun 29, 2018)

Gildan suspends dividend, cuts executive pay after losing nearly US$100M in Q1


MONTREAL - Gildan Activewear Inc. says it is suspending its quarterly dividend and cutting executive compensation after losing nearly US$100 million i...




www.thestar.com


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## londoncalling (Sep 17, 2011)

james4beach said:


> Shell just cut its dividend for the first time since WWII. First dividend cut in *75 years*.
> 
> Shell cuts dividend for first time since 1945 amid oil price collapse


I am/am not surprised by this announcement. It is puzzling to me that the market rallied so quickly as cut after cut had been announced. It's as though we foresee the cuts and carry on believing the markets can't and won't fail due to government stimulus. Time and again I said I would not purchase an oil company but had Shell and Chevron on my watch list. Chevron announced an increase in January but I am not sure they may reverse course with future announcements.


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## milhouse (Nov 16, 2016)

TC Energy/Trans Canada Pipelines reaffirmed it's dividend guidance of 8-10% in 2021 and 5-7% beyond (after this year's 8% increase) in today's Q1 earnings call (at the 15 min mark and 32:40 mark).


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## dubmac (Jan 9, 2011)

great news from TRP


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## Foiwater (May 16, 2018)

Good insight from a great investor on youtube:


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## peterk (May 16, 2010)

milhouse said:


> TC Energy/Trans Canada Pipelines reaffirmed it's dividend guidance of 8-10% in 2021 and 5-7% beyond (after this year's 8% increase) in today's Q1 earnings call (at the 15 min mark and 32:40 mark).


I don't know why anyone takes guidance communications from management seriously, though.

Their words are always designed so that tomorrow they can say the exact opposite thing and everyone will just go along as if that's an OK thing to have happened.


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## Eder (Feb 16, 2011)

Accuracy of guidance depends on the company...Trans Canada I tend to believe...Trans Alta...well...lol


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## Money172375 (Jun 29, 2018)

Lots of earnings releases this week. MIC, SLF, SU, FTS, MFC, NTR, AQN, FTS, BCE, ENB, IPL, MG, T.


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## Money172375 (Jun 29, 2018)

sleep country suspending dividends.









Sleep Country Canada sees sales sink in March, suspends dividend


Sleep Country Canada has suspended its dividend and buybacks as it reports a 27 per cent plunge in adjusted first-quarter profit. The mattress retailer also said same-store sales had been up 13 per cent year-to-date as of February, before sales plummeted in March amid COVID-19 and lockdown...




www.bnnbloomberg.ca


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## peterk (May 16, 2010)

Suncor cuts dividend to $0.21, beats earnings expectations slightly.

SU yields only 3.5% now.


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## londoncalling (Sep 17, 2011)

Foiwater said:


> Good insight from a great investor on youtube:


the plea to maintain was ignored.









Disney earnings plummet more than 90% as coronavirus wipes out more than $1 billion


Walt Disney Co. profit dove more than 90% in the second quarter, an example of the drastic effects on the company from the COVID-19 pandemic, which...




www.marketwatch.com


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## dubmac (Jan 9, 2011)

Alaris Royalty Corp (ALD.TO) reduced its dividend 30% from 1.65 to 1.16.


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## milhouse (Nov 16, 2016)

News release from BCE and T for Q1 results today. Both withdrawing 2020 guidance due to the uncertainties of COVID-19 impact. But no cuts to their dividends. T was supposed to raise their dividend this quarter but have deferred. However, reading between the lines, it sounds like they may get back on track during Q3 results in November which is when they usually do their 2nd increase during the year.


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## milhouse (Nov 16, 2016)

News release from ENB. Reaffirmed 2020 distributed cash flow guidance and no cut to their dividend.


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## milhouse (Nov 16, 2016)

News release from MFC. Income took a big hit. Dividend declared, steady at $0.28.


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## Eder (Feb 16, 2011)

So far this year my dividend income has increased at this point even though IPL reduced theirs. It will be interesting to see how my paycheck looks on Dec 31. My prediction is my dividend income will be up by 2-4%, just to be the contrarian around here.


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## cainvest (May 1, 2013)

Eder said:


> My prediction is my dividend income will be up by 2-4%, just to be the contrarian around here.


I wouldn't doubt it, CDZ div went from .094 to .104 from march to april ... we'll see how it does in may.


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## AltaRed (Jun 8, 2009)

It will depend on the quality of one's holdings. I expect to be even, or up, on my Canadian component but for sure, my ex-Canada component will be lower given the slashing and burning in USA and Europe. Net-net, likely lower overall but that is okay. My survival plan factors in downside risk in investment income.


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## Money172375 (Jun 29, 2018)

Algonquin raises dividend.



https://ca.finance.yahoo.com/news/algonquin-power-utilities-corp-announces-213000436.html


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## kcowan (Jul 1, 2010)

I am expecting to be down somewhat. For starters, I hold SU and NFI!


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## Money172375 (Jun 29, 2018)

Recipe suspends dividend. They had just raised it in March.



https://ca.finance.yahoo.com/news/recipe-unlimited-corporation-temporarily-suspends-004300327.html


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## agent99 (Sep 11, 2013)

Eder said:


> My prediction is my dividend income will be up by 2-4%, just to be the contrarian around here.


Because I have done quite a bit of de-risking, based on current yields, our overall div & int will go down by 10.9% and divs alone by 6.5%. This largely because cash from some equity sales went into low yield but safe GICs. 
Dividends (and some interest) from the taxable accounts that we draw from should be up by 3.85% over 2019.

So far, only one holding, Methanex (held in RRIF), has cut dividend and I don't hold much of that. 

Happy that I was able to dispose of the two risky pipelines and Vermilion without much of a loss. The remaining equities are mostly banks, utilities, telecoms. Plus a few others and about $150k now in utility/telecom perpetual & high spread RR pfds bought after they were carried down with the tide. One or two of my equities _may_ reduce dividends. In fact none of us have any idea as to what "might" still happen. 

No more trading for a while!


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## londoncalling (Sep 17, 2011)

https://www.westernforest.com/wp-content/uploads/2020/02/NR-Results-2020-Q1-FINAL.pdf



Add Western Forest to the ever growing list of dividend cutters.


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## james4beach (Nov 15, 2012)

Just wanted to mention that I dumped CAE on Monday when I reviewed my growth portfolio. I don't like the holding any more. It was part of an aggressive portfolio that I regularly review and modify.


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## like_to_retire (Oct 9, 2016)

Yeah, the plague hasn't done CAE any favors as they heavily rely on the airline industry to purchase simulators. They've branched out somewhat in the last years, but they still rely a lot on airlines to buy their products. They've recovered in the last while, so probably a good exit point James. They've done OK over the 5 year graphs - time to move on I guess for you. Hey, why didn't you just sell in the middle of February? hehe

I know the airlines have hopes of opening up their business, but it will be a while before they return to normal training and thinking of purchasing simulators. Your money is probably better deployed elsewhere with regard to growth companies.

My career was in electronic engineering/air traffic control hardware and I worked at CAE for about a year as a technical representative for my company as CAE developed a simulator for us. It's a really fascinating company.

ltr


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