Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Bloomberg article on dividend cuts due to oil prices
Old 03-17-2016, 07:06 AM   #1
Recycles dryer sheets
 
Join Date: Nov 2013
Posts: 355
Bloomberg article on dividend cuts due to oil prices

Oil Investors See $7.4 Billion Vanish as Dividends Are Targeted - Bloomberg Business


Sent from my iPad using Tapatalk
__________________

__________________
jabbahop is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-17-2016, 07:09 AM   #2
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,412
A snippet or short summary for members here would be nice.
__________________

__________________
MichaelB is offline   Reply With Quote
Old 03-17-2016, 07:21 AM   #3
Recycles dryer sheets
 
Join Date: Nov 2013
Posts: 355
Sorry - was having trouble selecting text on ipad for snippet. Here you go...

“It really reinforces the necessity of having a margin of safety if you are buying a stock primarily for its dividend," said Josh Peters, editor of Morningstar Inc.’s DividendInvestor newsletter. “What we have found for some of the energy companies is that the margin of safety was either slim or nonexistent."



Sent from my iPad using Tapatalk
__________________
jabbahop is online now   Reply With Quote
Old 03-17-2016, 07:22 AM   #4
Recycles dryer sheets
 
Join Date: Jan 2014
Posts: 73
Snippet from the beginning of the article........

<Start Snip>
Bludgeoned by falling energy prices, at least a dozen oil and natural gas companies have opted to cut dividends this year to preserve cash, cannibalizing payouts considered sacrosanct by many investors.

The cost to shareholders: more than $7.4 billion in lost income, compared to what they would have received this year if the payouts remained the same.

It’s another painful measure -- along with tens of thousands of layoffs and more than $100 billion in canceled investments -- of the toll taken on the industry by the worst oil and gas price slump in decades.

The quarterly payments, prized by conservative shareholders as a source of steady income, are unlikely to be restored any time soon.

<End Snip>
__________________
DatumPoint5 is offline   Reply With Quote
Old 03-17-2016, 07:41 AM   #5
Thinks s/he gets paid by the post
 
Join Date: May 2014
Location: Utrecht
Posts: 2,204
It reminds me sort of of the 5 stages of loss and grief.

(before slump): we will continue to raise our dividend as our business develops
Stage 1: We are committed to keep our dividend constant
Stage 2: We have lowered dividends to a sustainable attractive yield
Stage 3: We have paid dividends for an uninterrupted period of xx years, and plan to continue to do so
Stage 4: We will restore dividends as soon as market conditions permit
Stage 5: Our rights issue is favorable for our loyal investors
__________________
Totoro is offline   Reply With Quote
Old 03-17-2016, 08:36 AM   #6
Thinks s/he gets paid by the post
Tadpole's Avatar
 
Join Date: Jul 2004
Posts: 1,169
Maybe the unrealized expectation of dividend income should be tax deductible.
__________________
Tadpole is offline   Reply With Quote
Old 03-17-2016, 09:45 AM   #7
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 4,092
Quote:
Originally Posted by Tadpole View Post
Maybe the unrealized expectation of dividend income should be tax deductible.
__________________
Swing hard, look up
Big_Hitter is offline   Reply With Quote
Old 03-17-2016, 11:53 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Even if prices rebound, companies will be wary about restoring dividends, said Morningstar’s Peters. Their priorities will probably continue to be paying down debt and building up cash reserves to avoid another financial crisis, he said by telephone.
“It could be a lot of years before you see any meaningful rebound in the dividend," he said. “It’s tough to have a really conservative, stable investment in a business that can’t control the price of its own product."
This is the big thing- if one invests in oil production, to a meaningful extent he is investing in the commodity itself. And almost by definition, commodity companies are price takers, not price makers. Still, fortunes have been made here.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 03-17-2016, 12:10 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,391
This appears to be already factored in. The sector has been crawling out of its bottom set in late January. Buy, buy, buy?

PS. Two weeks ago, I filled up my motorhome in anticipation of the price moving up and paid $1.31. Yesterday, it was $1.65 when I filled up my car.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is online now   Reply With Quote
Old 03-17-2016, 12:16 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Originally Posted by NW-Bound View Post
This appears to be already factored in. The sector has been crawling out of its bottom set in late January. Buy, buy, buy?
What is factored in? If I didn't have something of a belief in the peak oil idea I would never have become involved here. As far as I am concerned the "fraccing revolution" does not invalidate peak oil.

Still, IMO the big risk here is technological, and as retirees we don't want to go overboard. Like ixnay on "buy, buy, buy". Not that this is necessarily wrong, but it definitely is not prudent.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 03-17-2016, 01:44 PM   #11
Dryer sheet aficionado
 
Join Date: Nov 2015
Posts: 31
I think some oil is a good mix to have in a portfolio. True I originally bought it some time back as much for the dividend as the share price. But I think oil is going to be around awhile yet as an energy source and I expect the price to go back up. But I could be entirely wrong.
__________________
sansha is offline   Reply With Quote
Old 03-17-2016, 02:38 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,391
Quote:
Originally Posted by haha View Post
What is factored in? If I didn't have something of a belief in the peak oil idea I would never have become involved here. As far as I am concerned the "fraccing revolution" does not invalidate peak oil.

Still, IMO the big risk here is technological, and as retirees we don't want to go overboard. Like ixnay on "buy, buy, buy". Not that this is necessarily wrong, but it definitely is not prudent.

Ha
By the time the media bemoans the dividend cut (what else does one expect with crude price dropping to 1/3 of its previous value?), it's old news and the stocks have already bottomed out.

Oil will be with us for a long time, despite advances in renewable energy. Regardless, my investment horizon is shorter, in the order of something like 2 to 5 years.

I had sold off most of my energy stocks, and have been slowly getting them back. I have been underweight in energy and am looking to get back to a bit overweight. My "buy, buy, buy" personally never means getting more than 10%.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is online now   Reply With Quote
Old 03-17-2016, 07:28 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,369
Quote:
Originally Posted by NW-Bound View Post
By the time the media bemoans the dividend cut (what else does one expect with crude price dropping to 1/3 of its previous value?), it's old news and the stocks have already bottomed out.

Oil will be with us for a long time, despite advances in renewable energy. Regardless, my investment horizon is shorter, in the order of something like 2 to 5 years.

I had sold off most of my energy stocks, and have been slowly getting them back. I have been underweight in energy and am looking to get back to a bit overweight. My "buy, buy, buy" personally never means getting more than 10%.

Im closer to 5% but I couldnt resist either....Resentful of the fact that Exxon never really went on sale and not understanding the less capitalized dogs with fleas, I just made a entire pure commodity bet with an ETN ticker DJCI. Of course I have to hope UBS doesnt go bankrupt since it is an ETN, but that is beside the point!


Sent from my iPad using Tapatalk
__________________
Mulligan is online now   Reply With Quote
Old 03-17-2016, 08:06 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,391
This surely looks like the entire commodity universe and not just oil as it has been going down steadily for the last 4 years.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is online now   Reply With Quote
Old 03-17-2016, 08:19 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Originally Posted by NW-Bound View Post
This surely looks like the entire commodity universe and not just oil as it has been going down steadily for the last 4 years.
I think you are correct. Did you run across some charts or something that prompted you to mention this?

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Bloomberg article on dividend cuts due to oil prices
Old 03-17-2016, 08:33 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,369
Bloomberg article on dividend cuts due to oil prices

Quote:
Originally Posted by NW-Bound View Post
This surely looks like the entire commodity universe and not just oil as it has been going down steadily for the last 4 years.

Yep, I wanted a piece of everything, because basically everything has gone down together. Its already up some since I bought it. They do say buy low and sell high, or that is the plan anyways....Its owns everything from oil ,to gold, to ag... It covers the whole gamut by specific percentage in one tracking note. Oil/gas represents about 25% of it.


Sent from my iPad using Tapatalk
__________________
Mulligan is online now   Reply With Quote
Old 03-17-2016, 08:38 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,391
Quote:
Originally Posted by haha View Post
I think you are correct. Did you run across some charts or something that prompted you to mention this?

Ha
I just looked at its price, and its decline does not correspond to oil which only succumbed in 2015.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is online now   Reply With Quote
Old 03-18-2016, 07:21 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Quote:
Originally Posted by NW-Bound View Post
Oil will be with us for a long time, despite advances in renewable energy. Regardless, my investment horizon is shorter, in the order of something like 2 to 5 years.
I agree. And this doesn't really impact your investment thesis but I wonder how much the future will really be like the past.

In the past oil prices followed a fairly predictable "life cycle" of growth, over-investment, euphoria, collapse, under-investment, recovery, rinse, repeat. And even if the length of each cycle wasn't predictable, the cycle certainly was.

Now we're clearly in the "collapse / under-investment" phase which will surely lead to a recovery of some sort. But this time I wonder if technology isn't poised to clip the "euphoria" phase well short of what we might ordinarily expect.

Over the course of the next decade it seems possible that electric vehicles and their supporting infrastructure will have matured enough to provide a real alternative to the internal combustion engine. The next time prices spike, there might be a much stronger, permanent, and self-reinforcing demand response as people switch to EVs.

I wonder if we've already experienced "peak oil" at least as it relates to prices.
__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Old 03-18-2016, 10:57 AM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,391
With renewable energy ramping up, coupled with the new supply of oil due to fracking, it is indeed hard to conceive the return of oil to $100+ a barrel. But that does not affect the price recovery of oil-related stocks in the next 2 to 5 years.

About overall commodity, particularly industrial metals which started their decline long before oil, instead of betting on the recovery of the commodities themselves via ETN, I prefer to buy stocks of the producers. XME is one of the granddaddies of ETFs, and I have traded it on/off over the past 15 years. I sold off most last year, but kept a bit for "keepsake". I missed its absolute bottom a month ago, and will look to getting some if it pulls back.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is online now   Reply With Quote
Old 03-18-2016, 05:23 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,369
Quote:
Originally Posted by NW-Bound View Post
With renewable energy ramping up, coupled with the new supply of oil due to fracking, it is indeed hard to conceive the return of oil to $100+ a barrel. But that does not affect the price recovery of oil-related stocks in the next 2 to 5 years.

About overall commodity, particularly industrial metals which started their decline long before oil, instead of betting on the recovery of the commodities themselves via ETN, I prefer to buy stocks of the producers. XME is one of the granddaddies of ETFs, and I have traded it on/off over the past 15 years. I sold off most last year, but kept a bit for "keepsake". I missed its absolute bottom a month ago, and will look to getting some if it pulls back.

I agree your philosophy has way more upside potential than mine without question. But mine has possibly less downside. I really didn't segue my original statement well as I was left implying I was buying that ETN for oil. It was more for the Ag commodities with just a splash of oil. I have been poking around in the Ag commodities and Ag eft funds. I dont have any real interest or purchases in the oil patch.


Sent from my iPad using Tapatalk
__________________

__________________
Mulligan is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 08:55 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.