Dividend Cuts - Starting To Outperform

Seeking AlphaDividend Quick PicksDividend Cuts - Starting To OutperformSep. 7, 2020 7:34 AM ET|| Includes: AWRRF, CAE, CJREF, GIL, IPPLF, LAUCF, LRCDF, MEOH, NFYEF, RHUHF, SCCAF, SU, UFS, VETby: Mat LitalienMat Litalien Value, Growth, Macro, long-term horizonStocktrades.cls-1{fill:#024999;}SummaryThe list of dividend cuts has held steady at 76 TSX-listed companies.
Instinct is to sell when there is a cut due to the perceived notion that the company will underperform.
Are dividend cuts and suspensions a bad thing? The data may suggest otherwise.
It has been a couple of months since the last update on Canada’s Dividend Cutters, and given the strong performance of the markets, it is time for another look.
Since the selloff in March, the S&P/TSX Composite Index has rattled off five consecutive months of gains. Along with this steady uptrend, the pace of dividend cuts has come to a screeching halt. Since our last update, there hasn’t been a single dividend cut – at least to my knowledge.
Can dividend investors finally relax? Although it is too soon to get comfortable, the strong show by most companies this past quarter is a good sign. It appears the pandemic-related economic shutdown is not having as widespread of an impact as once feared.
Is there reason to be optimistic? Absolutely. However, we are not out of the woods. The Feds are beginning to taper stimulus and although jobs are returning, there are still many who will be struggling without their CERB payments.
Since the last update, there were nine Canadian Dividend All-stars due to announce a dividend raise. As a reminder, All-Stars are companies which have raised dividends for at least five consecutive years.
Of those, five came through for investors, while four opted to keep the dividend steady. In my opinion, there is still too much uncertainty to say that dividend investors can rest easy.
In May and July, I analyzed the dividend cutters and their performance relative to their... Read more