10 Biggest Dividend Cuts and Suspensions of 2024

4. Baxter International Inc. (NYSE:BAX)

Number of Hedge Fund Holders: 35

Baxter International Inc. (NYSE:BAX) is an American multinational healthcare company that specializes in products to treat kidney diseases and other chronic medical conditions. In November, the company cut its dividend by 41% in anticipation of its planned $3.8 billion sale of its kidney-care division to Carlyle Group. Last year, the company announced the creation of a standalone kidney-care company as part of a larger restructuring, and in August, it finalized an agreement to sell the unit to Carlyle, with the transaction expected to close by late 2024 or early 2025. Baxter, which had previously stated it would use the approximately $3 billion in after-tax proceeds from the sale to reduce its debt, explained that the new dividend rate aims for a payout ratio of about 25% of adjusted earnings. Since the start of 2024, the stock is down by over 24%.

Baxter International Inc. (NYSE:BAX) reported revenue of $2.7 billion in the third quarter of 2024, down 27.2% from the same period last year. Despite the challenges, the company expressed confidence in its progress. It stated that the pending sale of its Kidney Care business marks another key milestone in its ongoing transformation. In addition, significant strides have been made in the hurricane recovery efforts at the North Cove, North Carolina, facility, driven by the dedication and resilience of the Baxter team, in collaboration with government agencies.

This was also highlighted by Broyhill Asset Management in its Q3 2024 investor letter. Here is what the firm has to say:

“Baxter gained 14%. The third quarter was a busy period for Baxter. The company entered into an agreement with Carlyle to sell its Kidney Care segment for $3.8 billion. The proceeds will allow it to pay down debt ahead of schedule, simplifying its balance sheet while it continues to drive operational improvements. During the quarter, Hurricane Helene disrupted supply at the company’s facility in North Carolina. Baxter is no stranger to IV supply disruptions, and we expect the current interruption will be immaterial to its long-term results.”

Baxter International Inc. (NYSE:BAX) dividend cut should not be a surprise for investors as the company’s cash flow has been affected recently. In the first nine months of the year, the company generated $376 million in operating cash flow, down from $792 million in the same period last year. It offers a quarterly dividend of $0.17 per share and has a dividend yield of 2.31%, as of December 22.

Baxter International Inc. (NYSE:BAX) was included in 35 hedge fund portfolios at the end of Q3 2024, compared with 40 in the previous quarter, as per Insider Monkey’s database. The stock held by these funds has a consolidated value of nearly $2 billion.