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Frequent Contributor

Re: Coronavirus Dividend Cuts and Suspensions

"Thank you Lord they did not cut our pension."

The safety of your pension depends on who is paying it.

If a corporation, their pension benefit is insured by the PBGC. The current economic condition has almost nothing to do with the current funding of their pension funds which must be funded each year to a level that sustains existing and future retirement benefits. But even if this economic slow down continues, future pension benefits will decline as workers are laid off, but annual funding will be required. If the company files for bankruptcy and is simply no longer able to fund the pension, it will be taken over by the PBGC and pension benefits, up to certain dollar maximums, will continue uninterrupted.

If a small employer or certain non-profit organization or certain religious organizations, the pension still falls under ERISA rules, but will not be insured by the PBGC. If the organization goes insolvent, the assets in the pension fund will be closed and distributed proportionally to pension beneficiaries IRAs.

If the pension is through a labor union (multi-employer pension plans), benefits are insured by the PBGC, but at a much lower level than fully PBGC insured pensions. There have already been some cuts in union pensions and there will likely be more as this economy slows and pension contributions from places like service workers and transportation unions lose large amounts of revenues and annual funding is greatly reduced on pensions that were already hugely underfunded.

If a state or local government, these may reduce pension benefits depending on state laws and state supreme court case precedent.  Although government pension benefit cuts are not very common they have occured. CA and IL are two states with some serious government employee pension benefit fund underfunding with little chance of getting these plans funded sufficiently to sustain the plan's accrued benefit.

BruceM

 

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Explorer ○○

Re: Coronavirus Dividend Cuts and Suspensions

Shell's cut will be a big hit for many people. They had a nice yield but the cut is steep at about two-thirds. There is too much oil and little demand for gasoline at the moment. Storage facilities are full and traders are parking oil in tankers.

Also the list at the Dividend Power blog was updated. There are now 178 companies that have cut or suspended their dividend as of April 29, 2020.

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Participant ○○

Re: Coronavirus Dividend Cuts and Suspensions

I was just kidding about the pension cut. All the shares I have was given to me on our 401 match, still feel the pain. Worked 28 years with them and have been drawing a pension for 28 years. Hard to beat that! Blessed a lot more then most.

Copie

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Explorer ○○

Re: Coronavirus Dividend Cuts and Suspensions

But no one really gets a pensions anymore unless they are first responder, teacher, or in a union.

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Frequent Contributor

Re: Coronavirus Dividend Cuts and Suspensions


@rpkrpi wrote:

But no one really gets a pensions anymore unless they are first responder, teacher, or in a union.


Actually, at least as of 2017, there are (were?) 16% of Fortune 500 companies who offer a defined benefit plan to new employees. Many dividend favorites are in this group, to include  XOM, KO, BBT, NEE, NS, PCG, SO, MMM, GIS, UPS, ACN,  AFL, JNJ, LMT. In 1998, just 20 years prior, there were 295 of the Fortune 500 companies (59%) that offered a defined benefit plan to new employees. However, 51% of Fortune 500 companies currently have employees that are accruing benefits even though the plans are closed to new employees. The two most common industries to offer DBPs are utilities and insurance.

DBP study 2017.JPG

I couldn't find any info on governments, but last I checked all states and territories and Feds offer defined benefit plans.

just some interesting info

BruceM

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Explorer ○○

Re: Coronavirus Dividend Cuts and Suspensions

219 companies have cut or suspended their dividends as of today. See list below.

https://dividendpower.org/2020/03/27/coronavirus-dividend-cuts-and-suspensions-tracker/

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Frequent Contributor

Re: Coronavirus Dividend Cuts and Suspensions


@rpkrpi wrote:

219 companies have cut or suspended their dividends as of today. See list below.

https://dividendpower.org/2020/03/27/coronavirus-dividend-cuts-and-suspensions-tracker/


Thanks, rpk!

"Most of the companies are in the travel, leisure, hospitality, restaurant, REITs, or energy sectors. The most prominent coronavirus dividend cuts and suspensions to date are Occidental Petroleum (OXY), Boeing (BA), Ford (F), General Motors (GM), Macy’s (M), Cracker Barrel (CBRL), Marriott (MAR), GAP (GPS), Disney (DIS), Expedia (EXPE), and a few others."

ElLobo, de la casa de la toro caca grande
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Follower ○○○

Re: Coronavirus Dividend Cuts and Suspensions

Is it too late to get of dividend etfs/mutual funds?  These are real companies and they are being slaughtered!  Should we buy?  A company cuts a 3% dividend and its not worth anything? Thoughts?

 

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Participant ○○○

Re: Coronavirus Dividend Cuts and Suspensions

Welltower cuts dividend 30% from $.87 to $.61 per quarter.

 

https://seekingalpha.com/news/3570370-welltower-cuts-dividend-adopts-1b-buyback

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Explorer ○○

Re: Coronavirus Dividend Cuts and Suspensions

In some cases, suspensions will be temporary. If the scene half of the year is better then the dividend should be restored. But in some cases dividend cuts will be longer lasting. I personally think that cruise lines, airlines, restaurants, are fundamentally changed. Oil majors and pipelines companies are highly dependent on the price of oil and natural gas.

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Participant ○○

Re: Coronavirus Dividend Cuts and Suspensions

There must be a better source than Reddit for this kind of information!

I note that the list also misses KTB, which suspended their dividend a few days ago.

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Explorer ○○○

Re: Coronavirus Dividend Cuts and Suspensions

Check the pension return assumptions in the footnotes to the financial statements. Many assume a return of 7-7.5% in a time where the 10-years Treasury is .6% and equity returns are unstable at best.

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Explorer ○○

Re: Coronavirus Dividend Cuts and Suspensions

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