Energy Transfer (NYSE:ET) and Simon Property Group (NYSE:SPG) tell a tale of high dividend yields under threat. The March collapse in oil prices followed with a rebound in recent weeks. And at a 15.3% dividend yield, investors should expect a dividend cut that helps ET’s quarterly cash flow.
Energy Transfer is a midstream whose management last said it would commit to its dividend. The company has room to cut staff by around 6% to lower costs. It has 90,000 miles of oil and gas pipelines and employs nearly 13,000 people.
As oil prices firm up, ET is in better shape to re-hire staff if it needs to. Its dividend appears safe for now.
Simon Property Group is a real estate investment trust whose sharp run-up to above $90 between June 3 and June 9 ended. At $67.12 recently, the stock may bounce back as premium outlet stores and malls re-open.
Although investors should brace for weak shopping traffic and rent collection woes ahead, the Taubman deal cancellation is a positive development. SPG is no longer on the hook for $3.6 billion. Though Taubman will seek legal recourse, SPG investors are better off.
