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CenterPoint Energy (CNP) is the first utility on my watch list to cut. Thought it would be able to make it without doing so, but I was wrong on this one.
CenterPoint Energy (NYSE:CNP) unveils several steps to strengthen its financial position in response to Enable Midstream Partners' (NYSE:ENBL) 50% distribution cut.
CenterPoint will reduce 2020 capital spending by $300M to $2.3B, target $40M in operation and maintenance expense reductions, and cut its quarterly dividend nearly in half to $0.14/share from $0.29.
Given CenterPoint's 53.7% ownership of Enable's outstanding units, the distribution decrease would reduce distributions to CenterPoint by ~$155M/year.
Separately, CenterPoint names Chief Accounting Officer Kristie Colvin as interim CFO to succeed Xia Liu, who will leave the company to become CFO at WEC Energy (NYSE:WEC).
CNP +3.6% pre-market.
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(04-02-2020, 11:06 AM)EricL Wrote: CenterPoint Energy (CNP) is the first utility on my watch list to cut. Thought it would be able to make it without doing so, but I was wrong on this one.
CenterPoint Energy (NYSE:CNP) unveils several steps to strengthen its financial position in response to Enable Midstream Partners' (NYSE:ENBL) 50% distribution cut.
CenterPoint will reduce 2020 capital spending by $300M to $2.3B, target $40M in operation and maintenance expense reductions, and cut its quarterly dividend nearly in half to $0.14/share from $0.29.
Given CenterPoint's 53.7% ownership of Enable's outstanding units, the distribution decrease would reduce distributions to CenterPoint by ~$155M/year.
Separately, CenterPoint names Chief Accounting Officer Kristie Colvin as interim CFO to succeed Xia Liu, who will leave the company to become CFO at WEC Energy (NYSE:WEC).
CNP +3.6% pre-market.
UTEs cutting divs is scary Eric.
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(04-02-2020, 11:15 AM)fenders53 Wrote: (04-02-2020, 11:06 AM)EricL Wrote: CenterPoint Energy (CNP) is the first utility on my watch list to cut. Thought it would be able to make it without doing so, but I was wrong on this one.
CenterPoint Energy (NYSE:CNP) unveils several steps to strengthen its financial position in response to Enable Midstream Partners' (NYSE:ENBL) 50% distribution cut.
CenterPoint will reduce 2020 capital spending by $300M to $2.3B, target $40M in operation and maintenance expense reductions, and cut its quarterly dividend nearly in half to $0.14/share from $0.29.
Given CenterPoint's 53.7% ownership of Enable's outstanding units, the distribution decrease would reduce distributions to CenterPoint by ~$155M/year.
Separately, CenterPoint names Chief Accounting Officer Kristie Colvin as interim CFO to succeed Xia Liu, who will leave the company to become CFO at WEC Energy (NYSE:WEC).
CNP +3.6% pre-market.
UTEs cutting divs is scary Eric.
CNP had significant exposure to an MLP, Enable Midstream. Enable cut its distribution, lowering the amount of cash flow headed to the parent company CNP.
It is a relatively unique situation, but there are a few others with exposure to mid-stream. OGE for example, has a stake in Enable as well.
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04-02-2020, 11:50 AM
(This post was last modified: 04-02-2020, 11:55 AM by fenders53.)
(04-02-2020, 11:22 AM)EricL Wrote: (04-02-2020, 11:15 AM)fenders53 Wrote: (04-02-2020, 11:06 AM)EricL Wrote: CenterPoint Energy (CNP) is the first utility on my watch list to cut. Thought it would be able to make it without doing so, but I was wrong on this one.
CenterPoint Energy (NYSE:CNP) unveils several steps to strengthen its financial position in response to Enable Midstream Partners' (NYSE:ENBL) 50% distribution cut.
CenterPoint will reduce 2020 capital spending by $300M to $2.3B, target $40M in operation and maintenance expense reductions, and cut its quarterly dividend nearly in half to $0.14/share from $0.29.
Given CenterPoint's 53.7% ownership of Enable's outstanding units, the distribution decrease would reduce distributions to CenterPoint by ~$155M/year.
Separately, CenterPoint names Chief Accounting Officer Kristie Colvin as interim CFO to succeed Xia Liu, who will leave the company to become CFO at WEC Energy (NYSE:WEC).
CNP +3.6% pre-market.
UTEs cutting divs is scary Eric.
CNP had significant exposure to an MLP, Enable Midstream. Enable cut its distribution, lowering the amount of cash flow headed to the parent company CNP.
It is a relatively unique situation, but there are a few others with exposure to mid-stream. OGE for example, has a stake in Enable as well.
I have completely avoided any UTE with significant exposure to petro pricing. I know where to got find that risk when I want it. Do you have much CNP in your port or was it just a screen candidate for your SA article?
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(04-02-2020, 11:50 AM)fenders53 Wrote: I have completely avoided any UTE with significant exposure to petro pricing. I know where to got find that risk when I want it. Do you have much CNP in your port or was it just a screen candidate for your SA article?
No, I don't own any CNP personally. It was simply on my utility watch list.
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(04-02-2020, 01:03 PM)EricL Wrote: (04-02-2020, 11:50 AM)fenders53 Wrote: I have completely avoided any UTE with significant exposure to petro pricing. I know where to got find that risk when I want it. Do you have much CNP in your port or was it just a screen candidate for your SA article?
No, I don't own any CNP personally. It was simply on my utility watch list.
I'm pleased to hear that. A UTE with no Div, or a significantly reduced Div does not have a bright near-term future.
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04-02-2020, 01:33 PM
(This post was last modified: 04-02-2020, 01:35 PM by EricL.)
(04-02-2020, 01:19 PM)fenders53 Wrote: I'm pleased to hear that. A UTE with no Div, or a significantly reduced Div does not have a bright near-term future.
CNP cut the dividend to $0.14 per quarter, which is a yield of 4.06%. It also drops the payout ratio to about 40% of current EPS estimates for 2020.
Might actually be a time to buy rather than sell on the cut.
Commentary from the company:
"In light of Enable's recent distribution decrease, this reduction in CenterPoint Energy's common stock dividend strengthens CenterPoint Energy's business risk profile by significantly reducing the company's reliance upon cash distributions from Enable," said John W. Somerhalder II, interim president and CEO. "We anticipate utility earnings contribution will approach 90% for 2020 and increase to nearly 100% over the next few years. The net result of today's actions supports CenterPoint Energy's firm commitment to maintaining investment grade credit quality and our continued strategic focus on growing utility earnings contribution."
and this:
"A targeted reduction in the company's quarterly common stock dividend from $0.2900 per share to $0.1500 per share, targeting a 50% - 55% utility earnings payout ratio"
Looks like dividend growth may actually exceed EPS growth going forward if they are targeting a 50-55% payout ratio.
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Probably a good decision. The new payout ratio looks safe.
TJX has suspended their dividend for the first quarter of fiscal year 2021.
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(04-06-2020, 10:36 AM)ChadR Wrote: TJX has suspended their dividend for the first quarter of fiscal year 2021.
That's a bit surprising. If they are suspending the dividend then every other company may follow that trend 
Nestle (NSRGY) raised their dividend 10.2%.
H.B. Fuller (FUL) raised their dividend 1.6% to 16.25 cents/share.
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