I just ran a stock screen on large cap stocks that are losing money but which are also paying dividends. At first blush this is an odd circumstance: dividend payments to shareholders are paid after net income is calculated. A conservatively managed company normally would pay dividends only if it generated sufficient revenues to have a positive net income at the bottom of its income statement. But these are all large companies, with a minimum market capitalization of $10.28 billion.
These companies’ balance sheets contain large amounts of current assets (assets, including cash, which can easily be converted to and used as cash) with which they can finance dividend payments almost indefinitely. Equity Residential (NYSE:EQR), with a market capitalization of $16 billion and a dividend yield of 2%, has the smallest amount of current assets, at $431 million, while BP plc (NYSE:BP) has almost $100 billion in current assets. (Admittedly, a large portion of that current asset stash on BP’s balance sheet may be paid out as litigation of the Gulf of Mexico oil spill is settled.)
The constraints I used for this screen were:
- A minimum market capitalization of $10 billion. I wanted only large, liquid stocks.
- A minimum dividend yield of .01%. I wanted some form of compensation for my investment, no matter how minimal.
- A maximum earnings per share of $0. I wanted to find only companies that are currently losing money and cannot find a way to report positive earnings per share. Recall that earnings per share is one of the most easily manipulated items on the income statement; therefore, companies that report negative earnings per share have some real difficulties.
Following are some key statistics for these companies.
- Allergan, Inc. (NYSE:AGN): This company has a market capitalization of $21,360,000,000, a dividend yield of 0.29%, a 52-week price change of 6.55%, earnings per share of ($0.04), a gross margin of 85.02%, a net profit margin of 0.10%, and $3,900,000,000 in current assets. Allergan is a multi-specialty health care company that discovers, develops and commercializes pharmaceuticals, biologics and medical devices. The Company develops products for the opthalmic, neurological, medical aesthetics, medical dermatology, breast aesthetics, obesity intervention, urological and other specialty markets in countries around the world.
- BP plc (ADR) (NYSE:BP): This company has a market capitalization of $144,250,000,000, a dividend yield of 3.63%, a 52-week price change of -20.22%, earnings per share of ($1.24), a gross margin of 3.71%, a net profit margin of -1.08%, and $96,800,000,000 in current assets. BP plc is an oil and petrochemicals company. The Company explores for and produces oil and natural gas, refines, markets, and supplies petroleum products, generates solar energy, and manufactures and markets chemicals. BP’s chemicals include terephthalic acid, acetic acid, acrylonitrile, ethylene and polyethylene.
- Equity Residential (NYSE:EQR): This company has a market capitalization of $16,390,000,000, a dividend yield of 2.50%, a 52-week price change of 36.60%, earnings per share of ($0.16), a gross margin of 59.33%, a net profit margin of -2.30%, and $431,000,000 in current assets. Equity Residential is a real estate investment trust. The trust acquires, develops, and manages apartment complexes in the United States.
- General Growth Properties, Inc (NYSE:GGP): This company has a market capitalization of $14,640,000,000, a dividend yield of 1.00%, a 52-week price change of 21.00%, earnings per share of ($0.34), a gross margin of 80.31%, a net profit margin of -30.69%, and $1,021,000,000 in current assets. General Growth Properties, Inc. is a real estate investment trust (REIT). The Company owns, operates, leases, acquires and expands enclosed regional shipping mall centers throughout the United States. The REIT, with its operating partnership also has unconsolidated equity interests in other regional mall companies.
- Host Hotels & Resorts, Inc. (NYSE:HST): This company has a market capitalization of $11,450,000,000, a dividend yield of 0.46%, a 52-week price change of 25.16%, earnings per share of ($0.21), a gross margin of 15.46%, a net profit margin of -2.88%, and $11,000,000,000 in current assets. Host Hotels & Resorts Inc is a real estate trust. The trust, which owns or holds controlling interests in upscale and luxury full-service hotel lodging properties in areas that include Washington, DC, Toronto and Calgary, Canada, Mexico City, Mexico, and Santiago, Chile, as well as Italy, Spain, Poland, Belgium, The Netherlands and the United Kingdom.
- Philippine Long Distance Telephone (ADR) (NYSE:PHI): This company has a market capitalization of $10,280,000,000, a dividend yield of 7.70%, a 52-week price change of -16.52%, earnings per share of ($3.63), a gross margin of 87.33%, a net profit margin of -0.77%, and $48,200,000,000 in current assets. Philippine Long Distance Telephone Company provides domestic and international long distance and cellular telephone services. The Company’s business group include fixed line, wireless, and information and communications technology.
- Qwest Communications International Inc. (NYSE:Q): This company has a market capitalization of $12,010,000,000, a dividend yield of 4.71%, a 52-week price change of 26.87%, earnings per share of ($0.03), a gross margin of 67.57%, a net profit margin of -0.47%, and $22,000,000,000 in current assets. Qwest Communications International Inc. provides broadband Internet-based data, voice, and image communications to customers in the United States. The Company provides local exchange services, and data and long-distance services to residential and business customers. Qwest also provides Web hosting services, high-speed Internet access, and private networks.
- Williams Companies, Inc. (NYSE:WMB): This company has a market capitalization of $17,960,000,000, a dividend yield of 1.64%, a 52-week price change of 33.42%, earnings per share of ($1.88), a gross margin of 26.36%, a net profit margin of -9.53%, and $25,000,000,000 in current assets. The Williams Companies, Inc. is an integrated natural gas company that produces, gather, processes and transports natural gas. The Company’s operations are concentrated in the Pacific Northwest, Rocky Mountains, Gulf Coast, the Eastern Seaboard, and the province of Alberta in Canada.