6 Terrifying Companies That Have Slashed Their Dividends Or Might Very Soon

There are plenty of sectors of the economy that have improved markedly since the financial crisis of 2008 -- technology, consumer goods, the service industry, aviation and travel to name a few. But there are others, led by the commodity sector, that haven't and are in danger of getting worse.

With the Federal Reserve looking to raise the federal funds rate this year, stocks will have stronger competition from bonds (and cash), especially those that have slow growth. But while stocks offer capital appreciation, many of them offer dividend payments as well. With that in mind, investors need to be aware of which ones are raising their dividends and which ones are cutting.

Sectors such as the oil space and anything that runs the risk of competing with Amazon (AMZN) have performed poorly this year, due to headwinds including continued supply builds and lack of innovation. 

While both large and small companies run the risk of cutting their dividends due to poor financial performance or being upstaged by a competitor, we've narrowed the list down for investors to keep in the back of their minds as they continue to hunt for names to add to their portfolios.

These are six companies highlighted by TheStreet that have recently cut their dividends or are in danger of doing so in the future.

Worried about how to finance your golden years? Register here to watch a webinar in which TheStreet's Jim Cramer talks with Ken Fisher, founder of Fisher Investments, about the market trends shaping retirement planning today.

Mattel
Mattel

The house that Barbie built looks as if it's on an increasingly shaky foundation after Mattel (MAT) recently announced a cut to its dividend.

Unlike its competitor Hasbro (HAS) , Mattel has not experienced the same kind of success by branching out into areas, like movies and television. Revenues have continued to decline, the company's debt profile has gotten worse and the dividend was unsustainable because of a weak free cash flow profile, hence the cut to the dividend.

By cutting the dividend, Mattel is going to save roughly $310 million per year (based on the latest share count) in dividend payments. That could be put into the company's new growth initiatives, including what it calls "digital-first solutions" and building the company's "power brands into connected 360-degree play systems and experiences."

LM Ericsson Telephone
LM Ericsson Telephone

LM Ericsson Telephone  (ERIC)  has several positives going for it, including operating in the mobility, broadband and cloud services spaces. But unfortunately, that hasn't helped the company.

It recently slashed its dividend by more than 70% to SEK 1.00, from SEK 3.70. Institutional investors have taken notice of the company's poor performance as well. Symons Capital Management sold part of its stake, selling 81,725 shares in the fourth-quarter of 2016.

Guess
Guess

Amazon has seemingly eaten everything it's touched and that could wind up being retail next.

Guess (GES) , who does sell some of its wares on Amazon, has struggled in recent years and could be at risk for a dividend cut.

Sales have fallen more than 12% in the past three years according to its publicly available financial statements, while profits have fallen more than 80% during the same time frame.

At current levels, shares yield more than 7.5%, nearly three times what the 10-year U.S. Treasury yields, raising eyebrows for some.

Mosaic
Mosaic

Mosaic (MOS) cut its dividend in February as the market for phosphate products (used in farming) pushed potash and phosphate prices to lows not seen in several years.

Earnings fell more than 50% year-over-year and the company wound up cutting its dividend as a result. Reality Shares, which tracks the financial health of a company, gives the company a DIVCON score of 1, the lowest among dividend-paying companies it tracks.

BP
BP

BP (BP) is also at risk of a dividend cut, as oil prices have remained stubbornly low for years.

Spot price on West Texas Intermediate crude oil is hovering around $43 a barrel, and Brent crude is only a few dollars more expensive, near $46 a barrel. After raising its dividend in 2014 on the back of seemingly firmer oil prices, BP has kept its dividend steady since then, despite revenue and profits continuing to decline.

At current prices, shares of BP yield 6.9% -- that's probably unsustainable. 

Eni
Eni

Like BP, Italian oil giant Eni S.p.A. (E) is in a similar precarious position.

Profits have continued to slide as oil prices have remained low or in some cases, fallen in recent years.

Eni, which trades on the New York Stock Exchange as an American Depository Receipt (ADR), has its ADR shares yield 5.8% at current levels, putting in danger of a potential cut, should oil prices not rebound.

Worried about how to finance your golden years? Register here to watch a webinar in which TheStreet's Jim Cramer talks with Ken Fisher, founder of Fisher Investments, about the market trends shaping retirement planning today.

Advertisement

More from Investing

In Pugnacious Twitter Rant, Musk Proposes Website for Users to Rate the Media

In Pugnacious Twitter Rant, Musk Proposes Website for Users to Rate the Media

One-on-One With Carnival Corporation CEO Arnold Donald (Watch)

One-on-One With Carnival Corporation CEO Arnold Donald (Watch)

Marc Chaikin's Technical Tools: Cramer's Off the Charts

Marc Chaikin's Technical Tools: Cramer's Off the Charts

Carnival CEO Arnold Donald: China Will Become the Largest Cruise Market

Carnival CEO Arnold Donald: China Will Become the Largest Cruise Market

Bitcoin Today: Prices Plummet Below $8,000 in Market Downturn

Bitcoin Today: Prices Plummet Below $8,000 in Market Downturn