Top 10 Preferred Share Dividend Stoppers
The preferred shares market has seen significant fluctuations in recent years, driven by changing interest rates and evolving investor preferences. In 2022, the global preferred shares market was valued at approximately $600 billion, with a notable increase in demand as investors sought stable income amid economic uncertainty. However, the rising interest rates have led to a tightening of dividend policies among corporations, making it crucial for investors to identify the top dividend stoppers in this segment. Understanding which preferred shares are currently halting dividends can provide insights into market stability and investment strategies.
1. General Electric (GE)
General Electric has historically issued preferred shares but paused dividends in recent years as it restructured its business. The company reported a $2.8 billion net loss in Q4 2022, leading to dividend suspensions. Investors have been wary, with GE’s preferred shares trading at a steep discount.
2. Ford Motor Company
Ford suspended dividends on its preferred shares in early 2020 as part of its cost-cutting measures during the pandemic. The automaker reported a net loss of $1.3 billion in 2020, and while it returned to profitability in 2021, uncertainty around supply chain issues has kept dividends on hold.
3. Citigroup Inc.
Citigroup paused its preferred share dividends during the COVID-19 pandemic, focusing on strengthening its balance sheet. The bank reported a net income of $22 billion in 2021 but chose to maintain dividend restraints as it navigated regulatory scrutiny and economic volatility.
4. American Airlines Group Inc.
American Airlines suspended its preferred share dividends in 2020 due to a significant drop in travel demand, incurring a $7.6 billion net loss that year. Although the airline industry has shown signs of recovery, the company has not yet reinstated dividends.
5. Occidental Petroleum Corporation
Occidental Petroleum suspended its preferred share dividends in 2020 as oil prices plummeted during the pandemic. The company reported a $15 billion loss in 2020, and while it has started to recover, dividend payments remain halted amid ongoing market volatility.
6. Wells Fargo & Co.
Wells Fargo suspended its preferred share dividends in 2020 amid financial reforms and litigation expenses. The bank’s net income was $21.6 billion in 2021, yet it has not resumed dividends on preferred shares, focusing instead on regulatory compliance.
7. Royal Caribbean Group
Royal Caribbean suspended its preferred share dividends in 2020 due to the pandemic’s impact on the cruise industry. The company reported a loss of $5.3 billion in 2020 but has since focused on liquidity, keeping dividends on hold as it recovers.
8. Delta Air Lines, Inc.
Delta halted preferred share dividends in 2020, reporting a $12.4 billion loss that year as travel restrictions took their toll. Although the airline has returned to profitability, it has yet to reinstate dividends for preferred shareholders.
9. AT&T Inc.
AT&T suspended dividends on preferred shares as part of a strategic overhaul to reduce debt. The company reported a loss of $5.5 billion in 2021, and while it aims to improve cash flow, preferred dividends are still on hold.
10. Kraft Heinz Company
Kraft Heinz suspended its preferred share dividends in early 2020 due to declining sales and profitability pressures. The company reported a net loss of $2.2 billion in 2021, impacting investor confidence and leading to ongoing dividend suspensions.
Insights
The trend of suspending preferred share dividends highlights the challenges faced by companies across various sectors, particularly in the wake of the COVID-19 pandemic and subsequent economic shifts. A report by S&P Global indicates that 35% of public companies with preferred shares have either reduced or suspended their dividends since 2020. As interest rates continue to rise, investors are urged to remain vigilant, focusing on companies’ financial health and market conditions before investing in preferred shares. Forecasts suggest that the preferred shares market may stabilize, but the focus on dividend sustainability will remain paramount in investment decision-making.
Related Analysis: View Previous Industry Report
