Campus Crest REIT Dividend Feels Like Bad Student Debt
Campus Crest Communities Inc. (NYSE: CCG) is a REIT tied to college campus living, with 86 student housing properties covering over 46,000 beds. In mid-December the company confirmed that its dividend would be cut, and the payout was dropped to $0.09 per share from a prior payout of $0.165. Its new yield is closer to 5%. Its lower dividend policy was targeting a balance sheet boost and liquidity improvement.
A resignation of its chief executive officer and chief financial officer a month earlier than the dividend cut announcement might have indicated some flaws were present. Now activist investors are involved, and more recently the company said it would explore strategic alternatives. With shares trading at $7.85 recently, its market cap is $508 million, and the 52-week range is $6.00 to $9.50.
Civeo Has Trouble in Oil Accommodations
Civeo Corp. (NYSE: CVEO) was a huge victim of falling oil. Sure, the supermajors suffered as well, but they are far better hedged than this oilfield housing company. In fact, all this negative pressure on Civeo caused it to suspend its dividend in mid-December rather than to lower it. Previously, the company had paid a $0.13 per share quarterly cash dividend. To show how high that would be, that yield would be almost 14% at current prices.
Civeo said in an open letter to Canada’s National Energy Board in December that the dividend suspension was due to economic uncertainty in the oil industry:
As it became evident during the fourth quarter that capital spending budgets among the major oil companies were going to be cut, we began taking steps to reduce marketed room capacity, control costs and curtail discretionary capital expenditures. In Canada, we have since closed our Athabasca and Lakeside lodges and are evaluating similar actions in select other locations. We are limiting our discretionary capital spending in 2015 to those projects that are supported by customer contracts.
Shares have been trading around the $3.80 mark recently, against a 52-week trading range of $2.66 to $28.40.
Cliffs Going Off the Proverbial Dividend Cliff
Cliffs Natural Resources Inc. (NYSE: CLF) has been under the gun since last fall, due to issues at Bloom Lake. Cliffs has a huge debt to pay with the initial liabilities between $650 million to $700 million. It tried to lessen the blow by paying down short-term debt and repurchasing senior notes. The iron ore and metallurgical coal player announced at the end of January that it was eliminating the quarterly dividend for this quarter and all subsequent quarters.
Previously, the company had a quarterly cash dividend of $0.15 per share, which was an annual yield of 8.9% from current prices. A drop of almost 70% from last year’s high is just part of the story. Cliffs has been driving off the cliff for years. To prove this point, its stock was worth almost $100 back in 2011 and has not seemed to land anywhere stable.
Analysts have not come to defend Cliffs, and that was before the dividend vanished. Credit Suisse lowered its price target to $1 from $10 at the end of 2014, reflecting a huge shift in confidence that Cliffs cannot cut it. Shares of Cliffs were recently changing hands around $6.70. The stock has a 52-week trading range of $5.63 to $21.25.
Cushing MLP Fund — “Mis-Adventures in MLP Funds”
The Cushing MLP Total Return Fund (NYSE: SRV) is one of the more speculative MLP closed-end mutual funds out there. It was the first of the common closed-end funds that had to lower its payout due partly to the following:
… reduced earnings from the Fund’s investments in certain upstream MLPs that were negatively impacted by the recent substantial downturn in crude oil and natural gas prices as well as the impact of leverage maintained by the fund.
Cushing’s new quarterly distribution was put at $0.055 per common share per quarter, for an annualized distribution rate of 3.55% at the time. That is far below its peers, and the fund said that distributions to shareholders will be changed from quarterly to monthly. Another warning: “It is anticipated but not certain that approximately 100% of the Fund’s distributions will be treated as a return of capital.” Shares dropped from $6.45 to $4.65 on the news, and they went lower since. Its 52-week range is $4.02 to 9.24, and its total assets before the price drop were listed as $326 million at the end of fiscal 2014.