For now, the dividend is clearly supportable "For now, the dividend is clearly supportable – currently, the company throws off about $800-million (U.S.) in free cash flow (operating cash flow minus capital expenditures and other items like restructuring charges), or about $4 per share. (At recent prices around $12, the free cash flow yield is a tantalizing 33 per cent.) The dividend is just $1.50 per share.
Still: While Pitney Bowes is more than just U.S. postage meters – 32 per cent of its sales are international, and it offers facility management services and customer-relationship management software – nearly all of its business segments report falling revenue, with an overall 6 per cent decline in the top line in the third quarter, compared with 2011.
Standard & Poor’s analyst Jim Corridore notes that Pitney Bowes has supported its cash flow by cutting capital expenditures to levels below the annual depreciation and amortization of its assets – an imbalance often regarded as a red flag for future dividend payouts.
However, Mr. Corridore, who has a $15 target price on the company, does not believe a cut in the dividend rate is likely, in part because he sees the company’s revenue issue as primarily cyclical, not secular. He believes Pitney Bowes will “return to slow growth by most financial measures over the next few years as the U.S. economy recovers.”"
Full article: https://www.theglobeandmail.com/globe-investor/investment-ideas/pitney-bowes-struggles-to-deliver-amid-declining-mail-volumes/article5215970/