Monday, February 8, 2016
COP very painful dividend cut
February 8, 2016
Conoco Phillips, symbol COP leads the way on the negative side. Huge dividend cut. COP will pay $.25 a share on March 1, 2016. COP will be ex-dividend on February 11, 2016. COP's previous dividend was $.73 per share.
For stocks like this I had hoped to build shares through dividend reinvestment. A dividend cut is needed to preserve the safety of the principle invested in COP. I will continue to hold as I think it is too late to sell. I will continue to reinvest the meager dividend.
Some attractive calls are available to boost your income and make up for the dividend cut. In this case you need to select a strike price much higher than your basis so make sure you do not have your COP called away and suffer a capital loss while you wait for the market to turn around. Keep your expiration dates a short as possible.
The table below illustrates a call available today that is risky when you look at the potential capital loss but encouraging for income.
Challenging times for income investors. Do not panic. Work your portfolio with a bias toward income.