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The G&M posted an article online yesterday (April 14) listing the "TSX stocks that have cut dividends since the start of the coronavirus crisis" but it's behind a paywall. The list is about. 33 companies long indicating date and cancellation or decrease. Their source is S&P Capital IQ.
In these times, you would think someone would have such a list on-line for all of use to access.

Maybe there is one somewhere (other than behind G&M's paywall)?

OK - I did find this one. Seems up to date!

 

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In these times, you would think someone would have such a list on-line for all of use to access.

Maybe there is one somewhere (other than behind G&M's paywall)?

OK - I did find this one. Seems up to date!

In these times, you would think someone would have such a list on-line for all of use to access.

Maybe there is one somewhere (other than behind G&M's paywall)?

OK - I did find this one. Seems up to date!


I currently hold shares or units in 31 Canadian names. 8 of the names on this list are names that I own. That is way more than I am comfortable with.

SGY
AFN
DIV
IPL
BPF.UN
NFI
CPG
CHE.UN

yuck!

Those 8 positions make up 10.3% of my total equity portfolio. I hate to make predictions but looking at the remaining names I could easily see 3 or 4 more cuts. Overall I am down about 19% from the portfolio high this year.
 

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I had sold most stocks I saw as more risky in January (Had just turned 80 and wanted to simplify portfolio). That turned out to be fortunate timing. Do still have 4 names that are on that list. But the value of those is minimal. Overall portfolio is down 16%, but that includes fixed income (some of which also dropped along with equities). I am sure portfolio will drop more before any recovery occurs. Just have to hold tight. Hopefully the blue chips will maintain their dividends.
 

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OK - I did find this one. Seems up to date!
I see that Peyto and PIzza Pizza were added to the list. That's 46 cuts now.

By the way, we received an increased April dividend from BCE - It was announce back in early February.
 

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The Canadian bank CEOs insist they will not cut dividends, even as we enter a potential Depression. What if this puts the banks into a poor financial condition, which then requires issuance of more equity, diluting and possibly even wiping out existing shareholders.

Would the shareholders then be able to sue the bank (CEO & board) for being negligent, and wasting all that money on dividends, resulting in their tremendous losses?

I think bank investors should think twice about cheering on the dividends. You will not benefit in the long term if your equity gets wiped out. The bank will survive... your equity might not.

Remember, dividends are not "free money". They come directly from the bank's internal accounts. If the balance sheet is in bad shape, paying out dividends only makes it worse.
 

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i suppose a cut is possible if there was an Extended economic downturn. i think we’ll see a few quarters of poor economic data, but I’m hopeful things will rebound at that time. If the banks were to cut dividends to zero, the only real currency would be food and guns.
 

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The Canadian bank CEOs insist they will not cut dividends, even as we enter a potential Depression. What if this puts the banks into a poor financial condition, which then requires issuance of more equity, diluting and possibly even wiping out existing shareholders.
.

The banks may not have a choice if things get worse.

This last week OSFI issued this information.

"When there are periods of economic uncertainty or a downturn, releasing capital buffers is the first step in OSFI’s contingency plan, as it enables banks to use the funds that had been set aside. To this end, on March 13, OSFI released 1.25 percentage points, which was about 55% of the Domestic Stability Buffer and at the same time, OSFI prohibited dividend increases and cancelled future share buybacks. OSFI will continue to monitor institutions’ capital and liquidity levels and if conditions warrant, is prepared to release the remaining 1.0 percentage points of the buffer.

OSFI has built other contingency measures into Canada’s capital regime. Specifically, as banks move through capital layers, there are disbursement restrictions. For example, if sustaining a bank’s capital level requires it to access funds that are in the Capital Conservation Buffer, the bank will be automatically required to restrict disbursements, including dividends and share buybacks".


If you read through this, you see that banks as of March 13 appear to be prohibited from dividend increases and cancel future share buybacks.

The last paragraph seems to say that if OSFI is required to move further that banks will be required to restrict dividends. That's not saying dividend increases, rather cutting dividends.

ltr
 

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It's not great that OSFI relaxed capital requirements, but at least the OSFI is looking out for the balance sheet health, when the CEOs and CFOs refuse to. This is exactly why we need strong and independent regulators.

And OSFI isn't actually very independent. Too many close relationships to banks, even people hopping back and forth between them.
 

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It does not mean there is a conflict of interest. It is not unusual, indeed it is common, for the regulator's employees and decision makers o have obtained real life experience in the industry in which they regulate. You want real experience, not some executive that spent 20 years working elsewhere, e.g. for GM, in OSFI.

Generally speaking, individuals in regulatory oversight positions disclose past interests and recuse themselves from decisions involving a former employer. For example, a former VP of TD in OSFI would not involve him/herself in the oversight and decisions involving TD, but there is no reason why that individual wouldn't provide oversight and/or be part of the decision making on CIBC.

There are not spooks and conflicts around every corner.
 

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For years, investors have misunderstood what dividends are, including where the cash comes from. Sadly I think we're now in an environment where people who misunderstood dividends are going to learn the lesson the hard way.

Companies can only pay dividends when they have solid financial condition. The cash is directly transferred out of the corporation's account... it's not free money. It's more like a gift to shareholders, and has direct consequences: the company is left with a worse balance sheet, and a reduction in their equity value.

Suncor pays $2.6 billion cash a year in dividends. For them to pay those kinds of dividends, they need those billions of dollars in excess cash within the corporation. If they don't have the excess cash, they can't pay the dividend.

Ultimately, dividends are correlated with share prices even though people like to think they aren't. Both are tied to the company's profitability and overall health.
 

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True, banks may cut dividend payments if things deteriorate deeper and longer than the present. ...
but have a look at the past 100 years tho. None of the big 5 have cut dividends that I'm aware of at least.
If they do cut them, in say in late 2020, or in 2021, then I'll eat ham sandwiches until resume.
 

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Banks weren't 25:1 leveraged global derivative giants 50 or 100 years ago. They also survived to some extent by repeatedly acquiring each other and consolidating balance sheets; something that is no longer possible.

The Canadian banking environment today is completely different than it was 50+ years ago. These are now global banks with significant leverage & derivatives. I think that relying on their 100 year history is flawed reasoning; comparing apples to oranges.
 

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I'm not relying on anything.
As others have alluded to, that banks will carry on. mortgages payments will get paid in the fullness of time - there may be interruptions (like now). Yes there will be defaults, and yes, the next year, maybe two, will likely be bumpy.
Most people will make minimum payments. That is my prediction. Not proven.
Will banks collapse? I don't think that they will - but that's my investing premise at this time.
No one knows the answer(s).
 
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