BCE's Bibic Tries for a Reset by Finally Ending Dividend Drama
Welcome to Bay Street Edition, our weekly newsletter devoted to what's happening in Canadian finance, covering strategy, deals, people moves and economics.
I'm Christine Dobby, Bloomberg's Toronto-based banking reporter, and you'll find me in your inbox every Friday. This week, we're talking about Bell's move to slash its dividend payment, the outlook for mortgages and Wall Street bonuses. Plus: what the heck is a Labubu?
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9 minutes ago
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Meet the Only S&P 500 Stock That Yields Over 10%. Here's Why It Could Be Worth Buying in June.
Dow Inc. is under pressure due to weak customer demand, global competition, and high costs. Management doesn't want to cut the dividend, but it could be a good choice given cost pressures. Even if Dow cut its dividend in half, it would still have an excellent yield. 10 stocks we like better than Dow › Commodity chemical giant Dow Inc. (NYSE: DOW) is hovering around a five-year low and is now down around 50% from its spin-off price when DowDuPont split into three separate companies in April 2019. Dow has kept its dividend the same for the last six years. But since the stock has been beaten down so much, Dow's yield has jumped to a whopping 10.3% at the time of this writing -- making it the highest-yielding component in the S&P 500 (SNPINDEX: ^GSPC). Here's why Dow's challenges persist and why the dividend stock could be worth buying now, even if the company reduces its payout. Dow makes commodity chemicals -- mainly plastics and synthetic rubber. Dow has hundreds of products that are used either directly or indirectly across virtually every industry in the economy -- from electronics to food and beverage packing, textiles, construction, industrial applications, healthcare, cosmetics, household products like detergents and dish soaps, and more. Since these products are commodities, they lack pricing power. This is similar to the dynamic in oil and gas, where a gallon of unleaded gasoline sold at ExxonMobil is virtually the same as a gallon sold at Chevron. Consumers will largely make a purchase decision based on price, not brand. So Dow must achieve scale and operating leverage to ensure it can produce products at a competitive cost relative to its peers. Economic growth typically coincides with higher commodity chemical demand. But lately, two factors have been working against Dow. Demand is low across several end markets due to higher borrowing costs from elevated interest rates and slowing economic growth in key markets -- namely Europe. Another major challenge is competition. China has been ramping up investments in manufactured goods -- from chemicals to solar panels -- to take market share on the global stage. If China can produce chemicals sold by Dow for a cheaper price, it can undercut Dow on pricing. Dow is also working to become a more sustainable company by investing in plastic waste recycling and the world's first net-zero emissions integrated ethylene cracker -- known as its Path2Zero project in Alberta, Canada. However, on its first-quarter 2025 earnings call, Dow said that it is pausing Path2Zero to reduce its spending. Dow estimates that the pause will save the company $1 billion and reduce enterprise spending to $2.5 billion from $3.5 billion. Dow's latest quarter showed some signs of improvement, as it was the sixth consecutive quarter of year-over-year volume growth. But net sales still fell 3% due to a lack of pricing power -- which illustrates that demand is improving but competition is challenging. Dow's operating margin has gone from pre-pandemic levels around 8%, to 2022 highs in the mid-teens, to just 3.3% currently. As you can see in the chart, Dow's stock price is under pressure due to declining revenue and margins. The company's profit margin, which accounts for interest and taxes, is less than 1%. Dow is converting just $0.69 for every $100 in sales into profit -- which is unsustainable. It's also worth mentioning that Dow is free-cash-flow (FCF) negative, meaning that its operations can't support its dividend expense, so it has to rely on other means, such as debt. Since Dow isn't producing enough cash or earnings to cover its dividend, it can either sell assets, pull back on spending, take on more debt, cut the payout, or a blend of multiple ideas. As mentioned, Dow did pause its Path2Zero project, which could reduce its long-term earnings growth but will save on near-term expenses. On May 1, Dow completed the sale of a 40% equity stake in Diamond Infrastructure Solutions, which has infrastructure assets along the U.S. Gulf Coast. The sale netted Dow with $2.4 billion in initial cash proceeds, with the potential for $600 million more in proceeds if an option is exercised. Dow spent $494 million on dividends in its recent quarter, so the sale alone can cover the dividend expense for roughly five quarters. But selling assets or taking on debt to cover dividends is like plugging holes in a sinking ship. A preferred approach is to get the ship afloat -- or back to higher margins and consistent FCF -- so that operations can cover the dividend, and ideally, still have cash left over to pay down debt or buy back stock. In addition to savings from Path2Zero and the asset sale, Dow is also receiving around $1 billion in proceeds from a court settlement, and $1 billion in targeted cost savings by 2026, including $300 million in 2025. All told, Dow is on track to receive around $6 billion in additional cash or cost savings, most of which is coming this year. It's also worth mentioning that Dow has just $500 million in debt maturing in 2025 and no substantial debt maturities until 2027. So for now, its debt seems manageable. However, if Dow's margins remain depressed, it will have few choices but to cut the dividend. Dow's 10.3% yield is so high that the company could cut the payout by two-thirds and Dow would still yield 3.4% -- which is a solid source of passive income. When asked about the dividend on Dow's first-quarter earnings call, management responded that the cash and cost savings will help support the dividend, but that the situation is evolving and Dow will have to continue monitoring tariffs and macro factors. Dow may be a worthwhile turnaround play for investors who aren't banking on its dividend yield staying above 10%. If the company can use its cash proceeds wisely and continue managing its expenses, it could help weather the storm until economic conditions improve. However, it remains to be seen how Dow will hold up against the competition, even during a more normal operating environment. Dow has a long-term goal to have its dividend make up 45% of operating income. If Dow can get its operating margin back around the 8% to 9% range or if it cuts its dividend in half, it should be around that goal -- assuming it doesn't lose more pricing power. And if Dow can gradually improve its margins, the stock will begin to look dirt cheap. In sum, Dow has the cash and lack of debt obligations to afford its dividend in 2025. Going forward, I expect the company to cut its dividend at least in half or maybe by two-thirds if conditions don't improve, or it may decide to sustain the payout if there's a significant recovery in macro conditions. Risk-tolerant investors may want to scoop up shares of Dow now, with the stock at multiyear lows. In contrast, other investors may want to take a wait-and-see approach to Dow, as the next year will be pivotal in determining whether the company overcomes its present challenges or goes through with a dividend cut. Before you buy stock in Dow, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Dow wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor's total average return is 997% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy. Meet the Only S&P 500 Stock That Yields Over 10%. Here's Why It Could Be Worth Buying in June. was originally published by The Motley Fool
Yahoo
12 minutes ago
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Elon Musk threatens to decommission SpaceX's Dragon spacecraft after Trump feud. What does it mean for the US space industry?
When you buy through links on our articles, Future and its syndication partners may earn a commission. An explosive, and very public, feud between President Donald Trump and SpaceX founder Elon Musk on Thursday (June 5) has raised doubts over the future of America's space industry. The war of words could place $22 billion of SpaceX's government contracts with multiple U.S. space programs at risk, according to one estimate, although the real figure — which remains classified — could be significantly higher. Following threats from the president on his social media platform Truth Social that the U.S. could cancel the government contracts and subsidies awarded to Musk's companies, the CEO of SpaceX retorted that his space company would "begin decommissioning its Dragon spacecraft immediately." Hours later, Musk responded to a follower telling him to "cool off" by saying "Good advice. Ok, we won't decommission Dragon." The disagreement began on Tuesday (June 3) when Musk criticized the administration's proposed tax and spending bill on his social media platform X. "This massive, outrageous, pork-filled Congressional spending bill is a disgusting abomination. Shame on those who voted for it: you know you did wrong. You know it," Musk wrote on X. Related: 'No radio astronomy from the ground would be possible anymore': Satellite mega-swarms are blinding us to the cosmos — and a critical 'inflection point' is approaching This then escalated into a full-blown social media feud on Thursday, with Musk claiming that Trump's name appears in unreleased files relating to sex offender Jeffrey Epstein. The White House condemned these allegations. "This is an unfortunate episode from Elon, who is unhappy with the One Big Beautiful Bill because it does not include the policies he wanted," representatives wrote on X. Trump then claimed Musk "just went CRAZY," posting: "The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon's Governmental Subsidies and Contracts. I was always surprised that Biden didn't do it!" SpaceX's Dragon capsule is a reusable spacecraft capable of carrying up to seven passengers and cargo to and from Earth orbit, according to SpaceX. NASA currently relies on the capsule to ferry astronauts to the International Space Station (ISS), so canceling these government contracts effectively eliminates America's ability to launch astronauts to space from American soil, Live Science's sister website, reported. NASA also heavily relies on SpaceX for other space programs, having selected the Starship Human Landing System (HLS), a lunar lander variant of the company's next-generation Starship spacecraft, to carry American astronauts to the moon for the first time in more than 50 years aboard the 2027 Artemis 3 mission. NASA is investing $4 billion into Starship's development, and canceling its contract could seriously handicap NASA and the future of U.S.-led space exploration. While other competitors exist, such as Amazon founder Jeff Bezos's Blue Origin and Boeing's Starliner spacecraft, they lag far behind SpaceX. RELATED STORIES —Facing steep funding cuts, scientists propose using black holes as particle colliders instead of building new ones on Earth —Trump's 2026 budget would slash NASA funding by 24% and its workforce by nearly one third —NASA plans to build a giant radio telescope on the 'dark side' of the moon. Here's why. The Starliner capsule is not yet certified to fly operational astronaut missions and was responsible for "stranding" two astronauts on the ISS for nine months last year. The astronauts returned to Earth on March 18 aboard a SpaceX Dragon capsule, and neither Boeing nor NASA have offered any significant updates into fixes that will make Starliner flightworthy. SpaceX's lead on its competitors is reflected in the size of its government subsidies. In April, the U.S. Space Force, the military branch of U.S. space exploration, awarded the company nearly $6 billion in launch contracts, while the United Launch Alliance received $5.4 billion and Blue Origin $2.4 billion. In response to the feud between Musk and Trump, NASA press secretary Bethany Stevens declined to comment on SpaceX, but she did tell Reuters that "we will continue to work with our industry partners to ensure the president's objectives in space are met." NASA's deputy administrator Lori Garver told Reuters that, as well as not being in national interests, canceling SpaceX's contacts would probably not be legal. However, she also added that "a rogue CEO threatening to decommission spacecraft, putting astronauts' lives at risk, is untenable."
Yahoo
12 minutes ago
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FAA slashes flights in, out of Newark Airport through end of 2025
Hourly flights at beleaguered Newark Liberty International Airport will remain drastically reduced through the end of the year as construction and staffing shortages continue plaguing the busy travel hub, the Federal Aviation Administration confirmed Friday. Just 28 arriving and departing flights will be permitted each hour on weekends from Sept. 1 through Dec. 31, as critical airport construction presses on. The rest of the time, there will only be 34 arrivals and departures through Oct. 25, the FAA said in a statement. 'The confirmed reduced rates will maintain safety while alleviating excessive flight delays at the airport due to staffing and equipment challenges, the agency said. 'The early completion of runway construction at the airport that added to the delays will also contribute to a more efficient operation.' Runway 4L-22R, which shut down on April 15 after the FAA deemed it unsafe and ordered a $121 million repair project, reopened Monday, 13 days ahead of schedule. The closure had left just two open runways. The FAA last month cut Newark's flight capacity to 56, a fraction of the 80-plus that used to fly in and out, during the project that had left just two open runways. The New Jersey airport has been embroiled in disaster after disaster this year, ranging from air traffic controller shortages to inexplicable technology glitches on top of the endless work. The mass chaos has left thousands of travelers stranded ever since the first tech disaster on April 28 saw a burnt-out copper wire spark a full-on blackout at the airport. Many pointed fingers at United Airlines, which makes up 75% of all Newark's flight traffic, and accused it of overcrowding the airport — prompting the carrier's CEO to vow that travel at the embattled airfield would be the 'cheapest' they've ever been this summer. The FAA assured that it is taking action to improve matters at Newark, including updating antiquated technology and boosting telecommunication connections, according to the release.
