In this article, we discuss 10 biggest dividend cuts and suspensions in 2022. You can skip our detailed analysis of dividend investment and its benefits, and go directly to read 5 Biggest Dividend Cuts and Suspensions of 2022.
Dividend companies are stealing the limelight this year as investors turn to these income-generating stocks to fight inflation. Dividends are still recovering after getting brutally hit by the Covid pandemic. According to a report by CNBC, global dividends fell by 12.2% to $1.26 trillion in 2020. The report also mentioned that dividend cuts amounted to $220 billion between the second and fourth quarters of that year.
Dividends have strongly rebounded this year due to growth in corporate earnings and elevated cash levels. According to a report by Janus Henderson Global Dividend Index, US dividends grew by 6.7% on an underlying basis to $146.2 billion during Q3 2022. The growth in dividends is attributed to surging oil prices and higher payments from banks and financials. The report also mentioned that dividends this year are projected to reach $1.56 trillion, up 8.3% year-on-year. Companies with strong dividend growth are favored by investors as they can generate stable income for them. Some of the best dividend stocks in this regard are Caterpillar Inc. (NYSE:CAT), Chevron Corporation (NYSE:CVX), and AbbVie Inc. (NYSE:ABBV) as these companies have strong dividend growth track records and solid financials to support further payouts.
Though dividends reached pre-pandemic levels in the second quarter of 2022, many companies still haven’t reinstated their payouts.
Several corporations also announced dividend cuts this year. During the third quarter of this year, 60 companies slashed their dividends, compared with 27 during the same period last year, as reported by S&P Dow Jones Indices. In the 12-month period ending September 2022, 232 companies decreased their payouts, amounting to $15.2 billion.
Photo by Dan Dennis on Unsplash
Our Methodology:
The dividend stocks mentioned below have reduced their dividends in 2022 due to the current market environment.
Biggest Dividend Cuts and Suspensions of 2022
10. Industrial Logistics Properties Trust (NASDAQ:ILPT)
Industrial Logistics Properties Trust (NASDAQ:ILPT) is an American real estate investment trust company that owns and leases distribution and logistics properties throughout the US. In the third quarter of 2022, the company missed analysts’ estimates on various fronts. However, its revenue of $103.2 million saw an 87.7% growth from the same period last year.
In July, Industrial Logistics Properties Trust (NASDAQ:ILPT) cut its quarterly dividend by 97% to $0.01 per share. The company reduced its dividend to enhance its liquidity until it completes its other financial plans. It expects the dividends to return to their normal level in 2023. The stock’s dividend yield on December 13 came in at 1.07%.
Industrial Logistics Properties Trust (NASDAQ:ILPT) is down 85.06% year-to-date, unlike other dividend stocks like Caterpillar Inc. (NYSE:CAT), Chevron Corporation (NYSE:CVX), and AbbVie Inc. (NYSE:ABBV), which have delivered positive returns this year so far.
In October, B. Riley lowered its price target on Industrial Logistics Properties Trust (NASDAQ:ILPT) to $11 with a Buy rating on the shares, citing the company’s recent debt refinancing.
At the end of Q3 2022, 15 hedge funds in Insider Monkey’s database owned stakes in Industrial Logistics Properties Trust (NASDAQ:ILPT), up from 9 in the previous quarter. The collective value of these stakes is nearly $29 million.
9. PPL Corporation (NYSE:PPL)
PPL Corporation (NYSE:PPL) is an American energy company that specializes in the distribution of natural gas. In October, Guggenheim lowered its price target on the stock to $27 with a Buy rating on the shares. The firm also lowered its baseline utility valuation due to higher interest rates this year.
In the third quarter of 2022, PPL Corporation (NYSE:PPL) posted an EPS of $0.41 per share, which missed estimates by $0.01. The company’s revenue for the quarter came in at $2.13 billion, up 41.1% from the same period last year.
Regardless of reporting a relatively strong quarter, PPL Corporation (NYSE:PPL) announced one of the biggest dividend cuts this year. In February, the company slashed its dividend by 51.8% to $0.20 per share. It currently pays a quarterly dividend of $0.225 per share and has a dividend yield of 3.07%, as of December 13.
At the end of Q3 2022, 28 hedge funds in Insider Monkey’s database reported owning stakes in PPL Corporation (NYSE:PPL), the same as in the previous quarter. These stakes have a total value of $496.6 million. With over 7 million shares, Citadel Investment Group was the company’s leading stakeholder in Q3.
8. Douglas Emmett, Inc. (NYSE:DEI)
Douglas Emmett, Inc. (NYSE:DEI) is a California-based real estate investment trust company. On December 8, the company announced a 32% decrease in its quarterly dividend to $0.19 per share. It slashed its dividend to increase its liquidity and with this decrease, the company will have $74 million per year in additional liquidity. As of December 13, the stock has a dividend yield of 4.73%.
In Q3 2022, Douglas Emmett, Inc. (NYSE:DEI) reported an FFO of $0.51, which fell in line with analysts’ estimates. The company’s revenue stood at $253.6 million, which showed a 6.47% growth from the prior-year period.
Piper Sandler downgraded Douglas Emmett, Inc. (NYSE:DEI) to Neutral in October with a $19 price target due to continued rising risks premiums in the real estate sector.
As of the close of Q3 2022, 23 hedge funds tracked by Insider Monkey held a bullish stance on Douglas Emmett, Inc. (NYSE:DEI), compared with 22 in the previous quarter. The stakes owned by these hedge funds have a total value of over $215.8 million, down from $344 million a quarter earlier.
Baron Funds mentioned Douglas Emmett, Inc. (NYSE:DEI) in its Q3 2022 investor letter. Here is what the firm has to say:
“Douglas Emmett, Inc. (NYSE:DEI) is a REIT that owns a portfolio of office and apartment buildings concentrated in West Los Angeles and Honolulu. Weak operational and financial results combined with investor concerns over a potential recession drove down the share price during the quarter. We remain optimistic about Douglas Emmett’s long-term prospects given its irreplaceable real estate portfolio.”
7. United-Guardian, Inc. (NASDAQ:UG)
United-Guardian, Inc. (NASDAQ:UG) is a New York-based diversified company that specializes in the research, manufacturing, and development of cosmetic ingredients and other pharmaceuticals. In the third quarter of 2022, the company reported revenue of $2.42 million, which fell by 23.9% from the same period last year. Its net income for the quarter came in at $345,518, down from over $1.01 million in the prior-year period.
On November 21, United-Guardian, Inc. (NASDAQ:UG) declared one of the biggest dividend cuts of 16.2% in its semi-annual dividend to $0.31 per share. Before this, the company also slashed its dividend by over 43% in May. Its five-year dividend CAGR stands at a negative 5.87%. As of December 13, the stock has a dividend yield of 6.12%.
At the end of Q3 2022, 2 hedge funds tracked by Insider Monkey owned stakes in United-Guardian, Inc. (NASDAQ:UG), the same as in the previous quarter. These stakes have a total value of over $4 million.
6. Devon Energy Corporation (NYSE:DVN)
Devon Energy Corporation (NYSE:DVN) is an American energy company that specializes in the exploration of hydrocarbons. The company announced one of its biggest dividend cuts this year after raising its payouts for 29 years consecutively. On November 1, it declared a 13% reduction in its quarterly dividend to $1.35 per share. The stock’s dividend yield on December 14 came in at 8.37%.
DVN cut its dividend due to the company’s managed distribution plan. However, many companies like Caterpillar Inc. (NYSE:CAT), Chevron Corporation (NYSE:CVX), and AbbVie Inc. (NYSE:ABBV) remained consistent with their dividends over the years.
In Q3 2022, Devon Energy Corporation (NYSE:DVN) reported revenue of $5.43 billion, which showed a 56.5% growth from the same period last year. The company’s cash position remained strong, with $2.1 billion in operating cash flow and $1.5 billion in free cash flow.
Piper Sandler lifted its price target on Devon Energy Corporation (NYSE:DVN) in December to $98 with an Overweight rating on the shares, appreciating the company’s solid performance in Q3.
At the end of Q3 2022, Devon Energy Corporation (NYSE:DVN) was a part of 51 hedge fund portfolios, according to Insider Monkey’s database. The stakes owned by these hedge funds have a total value of over $1.5 billion. With over 10.6 million shares, GQG Partners was the company’s leading stakeholder in Q3.
GoodHaven Capital Management mentioned Devon Energy Corporation (NYSE:DVN) in its Q2 2022 investor letter. Here is what the firm has to say:
“Our biggest dollar gainer within this period was Devon Energy Corporation (NYSE:DVN), a position which emanated from a takeover in early 2021 of our long time holding WPX Energy. We are sitting on a material (unrealized) gain from our cost and are now receiving material dividends thanks to Devon’s thoughtful fixed/variable dividend policy. Energy is now a hot sector for investors but we have had a material exposure for a long time. We remember a bit too well $40 oil, NEGATIVELY PRICED front-month oil contract, and what it’s like to own a company with leverage and negative free cash flow during such periods. Our desire to have our biggest portfolio exposures be high return, growing, reasonably predictable and moderately levered companies lead us to reduce our Devon exposure in the past. When the recent facts and circumstances for the industry changed and appeared supportive of healthy oil prices, we decided to maintain a sizable holding and more recently added to the position. At Devon’s Q1 dividend rate, which is mostly variable in nature, the shares now yield approximately 10% and our yield on our average cost is materially higher. In addition, we maintain additional energy exposure through our long-term (and successful) holding in Hess Midstream and less directly through TerraVest and Berkshire Hathaway’s energy investments.”
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Disclosure. None. 10 Biggest Dividend Cuts and Suspensions of 2022 is originally published on Insider Monkey.