It's rare that I have seen yield mean less than it does right now in the oil patch or in anything related to China.
There was a time when I would have thought, for example, that I could get Chevron (CVX) with a 5% yield or Conoco (COP) with a 6% one, and I would have been saying, "How can you not pick some up?" But the other times these stocks have been down here, no one expected a sustained downturn that would call their cash flow into such question. Both companies pledged their fidelity to the dividend when they reported, but it really didn't seem to matter at all.
As far as the distributions for the pipeline limited partnerships? They are all considered totally suspect. All of them. Plains All American (PAA) pretty much assured us of that when it talked on the call about the possibility of not raising its distribution any time soon. What was extraordinary was that the stock acted as if it was going to cut the dividend. Same thing with MarkWest (MWE), which is doing incredibly well and is merging with MPLX (MPLX) so it doesn't even matter. That group's got the double whammy of too much MLP supply and some real bad holders, oh, not to mention a belief, rightly or wrongly, that we don't need all the pipes anymore because we aren't going to ship as much as before. MarkWest is sending Marcellus natural gas to where it is needed and there's little chance of that going away.
Or take Caterpillar (CAT). There is no doubt its almost 4% dividend is safe even as the company has a ton of Chinese exposure.
But it isn't enough protection against earnings shortfalls.
What's daunting right now is that many of these stocks are trading at worse levels than they did relative to their yield in the Great Recession. It says to me that the Fed is going to raise more than we think and people think the dividends are going to be cut more than the companies believe.
That's why these moves are so worrisome.
Yesterday after I did a whole show urging even more caution than usual as I haven't liked the setups most days, I heard more than the usual catcalling by the Twitter-atti. "Oh, if Cramer's this bearish, then I better get ultra-long," pretty much summed it up. News flash: Signs like yield not mattering are signs of real trouble. I am not predicting, I am just seeing, and I don't like what I see.