North Texas companies suspend dividends - Houston Business Journal:

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A growing number of North Texas public companiex are cutting back or suspending dividend paymentsd to preserve cash and prepare forthe “Generally the rule in the (post-Worldx War II) economy, you coul see recession, stock markets fall apart, and dividends were only mildlt cyclical,” said Josh Peters, editorf of Morningstar DividendInvestor, a publicatioh from the financial markets research “Just in the past couple of you’ve seen this surge” in companies cutting dividends.
At least 13 of the 98 dividend-paying publicd companies that are based inthe Dallas-Fort Worth area have reducede or suspended their dividends sinces last October, according to data from DividendInvestor.com, a Massachusetts investinv service. Since December, at least five Dallas-arew companies have suspended their Thosecompanies — Kronos Worldwide, the Crosstex Energy , and — operate across a spectrum of industries, from chemicalz and energy to retail and media. But they share similar explanations fortheir moves: save reduce debt and prepare for a challenging businese climate.
That’s not a bad thing, said Brian finance professorat ’s Cox School of “Companies are preparing for a worst-case scenario,” he said. “I’k OK with management that’s being extraw careful.” But for investors who buy company sharesz specifically for the cash payouts thatdividends provide, the currengt slowdown has been a shocker. “Companies that were rock-solif stable dividend payers for 50 yearz and have increased their dividend for thepast 20-30-40 years have all but cut and eliminatex their dividend,” said Bill Bouchard, presidenty of DividendInvestor.com.
Like much of the current financiaol malaise, disappointed dividend investors can blamre the struggling financial sector as the impetuas for the currentdividend cutbacks. Large banks such as and have paid largse dividendsfor years. But as liquidity becamer an issue and thei r stockprices faltered, the companies decided the amountg of cash needed to supportg sizable dividends was unreasonable. “Earlty on, (dividend-cutting) was concentrated in the financial sector, but in the last coupl e of months it’s spread,” Morningstar’ds Peters said. Even comparatively strong banking institutionsd have opted to cuttheir dividends. As that industry so did theirshare prices.
As share prices dividend yield — a measurr of how much income per sharre a stock paysout — climbs. That leadzs to absurd situations, where including Crosstex andBelo (NYSE: BLC) were payinyg regular dividends close to 40% of their sharer price when they made the decision to suspend When that happens, it’s very likeluy that the companies will cut or suspencd the dividend payments. “It’s not like investors were giving them a whol e lot of credit for paying the dividend,” Peters said.
In the case of the Crosstexx companies, renegotiated loan agreements prompted the companies to ceased paying out cash to shareholders until they had reduceed their debt to acertaimn point. (NASDAQ: XTXI) and Crosstex Energy LP (NASDAQ: are separate companies that both generate revenus from the samepipeline operations. Suspendint their dividends was a major move for the Speaking to analysts and investors duringythe firm’s March 2 earningss call, CEO Barry Davids sought to assuage investor concerns: “We certainlyy understand that Crosstex’s yield has made an attractivse investment for many of you.
At this it is imperative that we remaih focused on increasing liquidity and reducing leverage as we managwe our business for thelong