ConocoPhillips (COP) announced a 66% dividend cut this morning. Probably not a major surprise to anyone. Even D4L, who published an analysis on Feb 2, was cautious in his outlook. At least the markets’ reaction was normal – giving the stock about a 8.5% haircut, although I’m sure this is little solace to the roughly 70 members of the DGI community that hold it.
Then there is one of mine, L Brands (LB). They reported 15% increase in quarterly sales comps. And a 20% dividend increase. And a $2.00 special dividend. So the stock is down 6.9% on news that January comps are off by 4%. For one month … and Valentine’s Day isn’t even here yet. Even Cramer called this insane.
Perhaps it’s a sign of the times. Rarely have the market and oil traded in similar ranges. One day weakness is attributed to a strong dollar, the next day it’s a result of a strong Euro. Then it’s jobs, interest rates, commodities or metals. If you don’t like today’s theory, you only have to wait until tomorrow’s. Perhaps, as Larry Fink mentioned, we are now creatures of the moment. Gone, apparently, are the days when CEO’s had the vision – and support – to operate in a multi-year window.
With all this volatility, there is at least one bright spot – dividends are generally being increased at a rate better than last year, which is the beauty of dividend investing. It does raise one additional point of weirdness. How this is possible when the markets lack direction. Or perhaps it is the talking heads that fail in deciphering the tea leaves.