Dividends in Danger? Worries About Sysco, Hudson City, Pitney-Bowes

This is the first in a series of monthly articles that will collect SA reader opinions about companies whose dividends may be in danger. The danger might come from bad economics, sudden catastrophes, margin compression, strategic choices, or there may be other reasons. This first article collects companies that have been identified over the past couple of weeks. The information for each company has been taken directly from comments and not independently verified. Always perform your own due diligence before making any investment decisions. Sysco (SYY) Several readers are uneasy about SYY’s dividend. The company has undertaken a deliberate decision to absorb rising food costs in an effort to gain market share from competitors. Some commentators feel that, because of this, SYY may not be able to cover its dividend in future quarters. Earnings have declined (year over year) in each of the 2 most recent quarters. Those tracking producer prices report that food costs for February rose 3.9% following substantial increases in previous months. One reader noted that SYY paid out 100% or more of its free cash flow in dividends for 5 straight quarters. Readers worry that these trends are unsustainable, and that the end result might be a cut in SYY’s dividend. This first article collects companies that have been identified over the past couple of weeks. The information for each company has been taken directly from comments and not independently verified. Always perform your own due diligence before making any investment decisions.Sysco (SYY) Several readers are uneasy about SYY’s dividend. The company has undertaken a deliberate decision to absorb rising food costs in an effort to gain market share from competitors. Some commentators feel that, because of this, SYY may not be able to cover its dividend in future quarters. Earnings have declined (year over year) in each of the 2 most recent quarters. Those tracking producer... Read more