by Jim Woods | August 7, 2012 6:30 am
InvestorPlace.com readers are used to seeing a comprehensive list each Friday of companies announcing increases to their quarterly dividend payments. Of course, there’s a flipside to that coin, and we tracked that in a recent article that covered the number of companies decreasing dividends through the first half of 2012.
And while there have been a substantial number of companies offering up good news to shareholders by increasing dividends since the halfway point of the year, an unusually high number of companies have also either suspended their dividend or announced a reduction in their annual payout.
The latest stock to make news on this front is online financial site TheStreet.com (NASDAQ:TST). Last Thursday, the company, which was co-founded by CNBC Mad Money guru Jim Cramer, reported disappointing second-quarter earnings.
And along with its earnings report, the company said it was suspending its quarterly dividend. TheStreet.com shareholders had been receiving a quarterly dividend of 2.5 cents a share, but that will cease effective immediately.
If you’re someone who bought the stock at least in part for the dividend — well, sorry, you’re out of luck.
TheStreet.com may be the latest firm to suspend its dividend, but it’s not the only company that’s moved to alter its payment to shareholders since the end of the second quarter. On July 11, struggling supermarket and grocery store operator SuperValu (NYSE:SVU) also suspended its dividend payout.
Ironically, the SuperValu dividend news was commented on by Cramer in his Mad Money show, where he said, “Today we found out what happens when we see this process play out for companies with battered balance sheets and declining fortunes.”
Commenting further on the SuperValu situation, Cramer said, “The dividend gets slashed or, in this case, eliminated despite all protestations to the contrary that anything like that could occur, including assurances given to me last year by the CEO, of comfort with that dispensation of cash directly from the company to you, the shareholder.”
Other high-profile dividend suspensions were electronics retailer RadioShack (NYSE:RSH) and Spanish telecom giant Telefonica (NYSE:TEF), which announced their respective dividend suspensions on July 25.
As for companies taking the less drastic step of reducing their dividend and not simply suspending payouts, we’ve already seen ten so far during the young third quarter.
On July 13, Dorchester Minerals (NASDAQ:DMLP), reduced its annual dividend payout 16%, from $2.17 to $1.83. On July 23, Hugoton Royalty Trust (NYSE:HGT) cut its annual dividend payout 32%, from 60 cents per share to 41 cents.
That same day, Permian Basin Royalty Trust (NYSE:PBT) reduced its annual dividend payout 15%, from $1.05 to 89 cents, while San Juan Basin Royalty Trust (NYSE:SJT) cut its annual payout 26%, from 85 cents per share to 63 cents.
On July 26, Washington Real Estate Trust (NYSE:WRE) cut its annual dividend payout 32%, from $1.76 to $1.20. The next day, SandRidge Mississippian Trust (NYSE:SDT) lowered its annual payout 8%, from $3.15 to $2.91, while Sandridge Permian Trust (NYSE:PER) lowered its annual payout 1%, from $2.33 to $2.30. Washington Banking Co. (NASDAQ:WBCO) also cut its payment that day, slashing its annual dividend 36%, from 56 cents per share to 36 cents.
On July 30, Invesco Mortgage Capital (NYSE:IVR) lowered its annual dividend 26%, from $2.60 to $1.92. At the same time, USA Mobility (NASDAQ:USMO) slashed its annual dividend payout 50%, from $1.00 per share to 50 cents.
If the next couple of months have anywhere near the number of dividend cuts and dividend suspensions as we’ve already seen so far in Q3, it’s going to be a tough second half of the year for some income investors.
At the time of publication, Jim Woods held no positions in any of the stocks mentioned in this article.
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