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5 Companies That Could Cut Their Dividends

By U.S. News & World Report

Dividend stocks often don’t offer explosive growth, but they do tend to offer investors stability and a dose of regular income. That’s why just about the worst thing a dividend-paying company can do is cut its payouts.

We saw this across the Great Recession when even big name companies like General Electric Co. (ticker: GE) were forced to reduce their dividends in the wake of the financial crisis. Before the meltdown, GE’s share price was around $40 in 2007 and its payout was 31 cents, but it crashed briefly to under $10 a share when its payout was cut to just 10 cents.

The damage has clearly already been done on GE. But which dividend stocks could be next, and are at risk of dividend cuts in the next 12 to 18 months?

[See: 20 Awesome Dividend Stocks for Guaranteed Income.]

Abercrombie & Fitch Co (ANF). Abercrombie & Fitch is one of those battered retail names that investors have brutalized in recent years; shares are off over 80 percent since July 2013 versus nearly 50 percent gains for the Standard & Poor’s 500 index in the same period.

There’s no secret as to why, as shoppers have avoided the apparel brand’s stores at the mall and ANF is operating at a loss. In fact, it’s not scheduled to turn a profit this fiscal year or even in 2018 despite a rash of layoffs and store closures.

That makes its 20-cent quarterly dividend all the more baffling. Abercrombie desperately needs capital to restructure amid falling revenue trends, so it’s only a matter of time before investors see that dividend slashed or eliminated.

CenturyLink (CTL). It’s rough out there for smaller telecoms, as evidenced by Frontier Communications Corp. ( FTR) which just slashed its dividend by roughly 60 percent in May. As such, it’s realistic to wonder whether peer CenturyLink will be the next to cut its payouts.

CTL stockholders have already endured one relatively recent cut in payouts, from 72.5 cents quarterly at the end of 2012 to 54 cents quarterly since 2013. But with earnings projections of about $2 per share both this fiscal year and next vs. annual dividend payouts of $2.16, the company is not on solid footing.

That’s just not sustainable, and if things don’t change the dividend will have to drop — just as it did for troubled Frontier Communications a few months back.

Barnes & Noble (BKS). In the age of Amazon.com ( AMZN), Barnes & Noble has been on the ropes for some time. But despite a decline of more than 80 percent in shares across the last decade, BKS made the bold call of reinstating a 15-cent dividend back in 2015 in order to win back Wall Street’s favor.

It didn’t work, with many investors wondering if the move was dangerous given the shaky balance sheet of the company. Shares have crashed from a high of more than $28 right before the payout resumed to the $7 range currently.

[See: 7 Dividend Stocks to Buy That Pay More Each Year.]

And with projected earnings of around 55 cents this year and dividends that will total 60 cents a share annually, it’s not hard to see why investors are skeptical the company is serious about shoring up its business in the face of e-commerce competition.

Sunoco (SUN). Life is rough right now for “downstream” energy company Sunoco, which relies heavily on retail and wholesale receipts of gasoline purchases. Weak crude oil prices are compressing margins across the supply chain, and pumping gas for motorists has never been a particularly high margin business to begin with.

As a result, Sunoco posted a massive loss last year and is barely operating above breakeven in 2017. With hefty dividends of 83 cents a share and not much in the way of profits to support those payouts, things need to correct in a hurry.

If they don’t, SUN shareholders may see their double-digit yields cut in half or worse as the company claws back capital and retrenches to adapt in the current age of low crude oil prices.

Franklin Street Properties (FSP). While not a household name, real estate investment trust Franklin Street Properties owns some very valuable and skyline-worthy structures that include space on Peachtree Street in downtown Atlanta to Broadway in Denver.

However, FSP faces challenges in both its real estate leasing and financing divisions. As a result, the company has seen flat revenue since 2014 even as other stocks have soared.

While the unique structure of a real estate investment trust demands big dividend payouts, the lack of top-line growth coupled with declining earnings and weak cash flow puts the 19 cent dividend and currently juicy 7 percent yield at risk.

[See: 10 ETFs That Pay Sky-High Dividends.]

FSP cut its dividend to 19 cents quarterly in 2008 during the financial crisis and has failed to raise it one red cent across nearly a decade since then despite big growth elsewhere on Wall Street. That says a lot about how management feels about its distributions and corporate outlook.

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5 Companies That Could Cut Their Dividends originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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