Identifying warning signs and potential buying opportunities
- Some significant companies will cut their dividends in 2024
- High yields, too much debt, and paying out a lot of free cash flow are warning signs
- Consumer-discretionary companies are at risk
- Eight companies identified as potential dividend cutters: Vail Resorts, Hasbro, Whirlpool, Wendy’s, Cracker Barrel, Leggett & Platt, LCI Industries, and Kohl’s
- These companies have high payout ratios and large debt loads
- Dividend cuts can present buying opportunities
- Dividend-cutters’ stocks underperform the market before the cut, but performance improves after
Some significant companies are expected to cut their dividends in 2024. High yields, too much debt, and paying out a lot of free cash flow are warning signs to look out for. Consumer-discretionary companies, in particular, are at risk. Eight companies have been identified as potential dividend cutters: Vail Resorts, Hasbro, Whirlpool, Wendy’s, Cracker Barrel, Leggett & Platt, LCI Industries, and Kohl’s. These companies have high payout ratios and large debt loads. However, dividend cuts can present buying opportunities, as seen with Intel’s stock performance after its dividend cut in 2023. It’s important to be patient when it comes to dividend cuts, as performance tends to improve after the cut.
Public Companies: Vail Resorts (MTN), Hasbro (HAS), Whirlpool (WHR), Wendy’s (WEN), Cracker Barrel Old Country Store (CBRL), Leggett & Platt (LEG), LCI Industries (LCII), Kohl’s (KSS)
Private Companies:
Key People: Chris Senyek (Wolfe Research strategist), Jack Kleinhenz (National Retail Federation economist)
Factuality Level: 7
Justification: The article provides information about the risk of dividend cuts for certain companies in 2024. It cites research from consulting firm McKinsey and quotes a strategist from Wolfe Research. The article also includes data on the dividend yields, debt levels, and estimated payout ratios of the companies at risk. However, the article does not provide any counterarguments or perspectives from the companies themselves, and it does not mention any potential factors that could mitigate the risk of dividend cuts. Therefore, while the information presented is based on research and analysis, it is important to consider other sources and perspectives to get a more complete picture.
Noise Level: 7
Justification: The article provides a thoughtful analysis of the risk of dividend cuts in 2024 and identifies specific companies that are at risk. It discusses warning signs to look for and provides data on dividend yields, debt levels, and payout ratios. The article also mentions the historical performance of stocks after dividend cuts. Overall, the article stays on topic and provides actionable insights for investors.
Financial Relevance: Yes
Financial Markets Impacted: Dividend-paying companies in the consumer-discretionary sector, including Vail Resorts, Hasbro, Whirlpool, Wendy’s, Cracker Barrel, Leggett & Platt, LCI Industries, and Kohl’s.
Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article discusses the risk of dividend cuts in certain companies, which can have financial implications for investors and impact the stock market.
www.marketwatch.com 
