Alright, let’s dive into this… So, last week, there was this poll, right? People got to pick which stock they wanted me to tear apart — I mean, examine for its dividend safety. And guess what? Icahn Enterprises (NYSE: IEP) won by a landslide. No shock there, considering it flaunts this insane 21% yield. Plus, it’s got Carl Icahn pulling the strings, and the guy’s, like, a Wall Street icon or something.
Now, Icahn Enterprises — it’s this holding company with its fingers in a bunch of pies. We’re talking energy, real estate, pharma, you name it. Anyway, they’re dishing out a quarterly dividend of $0.50 per share. With the stock hanging out a bit above $9, you get that eye-popping 21% yield. But, hold on. Can they really keep up such a juicy payoff?
So, let’s talk numbers. Last year, they raked in $156 million in EBITDA. Yeah, I know, fancy talk for cash flow. Normally, I’d check out other stuff — free cash flow, distributable cash flow, yadda yadda. But since they’re all about that EBITDA life, we’ll roll with it.
Now, they’re predicting this year’s EBITDA to almost double to $293 million. Sounds great, right? But here’s the kicker: that’s still a slump compared to three years ago. And in the world of dividend safety, that backward movement sets off alarms.
Now here’s a head-scratcher — their dividends last year were a whopping 251% of their EBITDA. Imagine making $156 million and then forking out $391 million in dividends. Crazy, huh? And this year, they’re on track to push that up to $475 million. Um, math, anyone?
Oh, also worth mentioning, they’ve slashed the dividend not once, but twice in the last couple of years. From 2019 to mid-2023, they kept it steady at $2 per share. Then, bam — chopped it down by 75% to the current $0.50. Ouch.
So here’s the deal: dropping EBITDA, repeated dividend cuts, and a payout bigger than their cash inflow? Yeah, those are red flags waving all over the place suggesting another dividend cut might be lurking around the corner.
Dividend Safety Rating? Let’s just say it’s an F on this one.
Alright, your turn! Got a stock dividend you want scrutinized? Drop the ticker in the comments. Or maybe check if we’ve already dissected your fave stock. Just hit “Search” on the Wealthy Retirement homepage, type away, and explore. Oh, and by the way, Safety Net’s got no time for ETFs, mutual funds, or closed-end funds — strictly individual stocks here.
