Dividends have been under a lot of pressure this year. The COVID-19 outbreak has had a significant impact on the global economy and the ability of many companies to maintain their shareholder payouts. One of the hardest-hit sectors has been energy because of the considerable decline in oil demand and the associated plunge in pricing. Those factors forced dozens of energy stocks to slash or suspend their dividend payments this year.

More payout reductions could be in the cards given the persistent weakness across that sector. Two big-time dividends that might be the next ones on the chopping block are those from oil giant ExxonMobil (NYSE:XOM) and pipeline operator ONEOK (NYSE:OKE).

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Nearing the end of an era

ExxonMobil's dividend seems to be hanging by a thread. The oil giant had increased its payout in each of the last 37 years. However, it failed to give its investors a raise this year. While the company could technically keep its streak alive with another boost early next year, its payout, -- which currently yields 8.5% -- seems more likely to go down than up.

Fueling that dour view is the projected gap between its anticipated cash flow and its capital requirements. According to one analyst, the company faces an $8 billion shortfall between its projected cash flow at $47 oil and its anticipated outlays for the dividend and capital expenses. That would pile on more debt, which has already risen from $47.1 billion to $68.8 billion because it significantly outspent cash flow this year as a result of lower oil prices.

The company can't continue piling on more debt without putting pressure on its balance sheet. Exxon probably needs oil in the mid-$50s to maintain its current payout and expected capital spending rate. That means the dividend is at risk for a reduction if oil prices don't improve.

The best-laid plans also go awry

ONEOK initially expected 2020 to be a big year. The pipeline company was putting the finishing touches on several expansion projects, which should have fueled significant volume and cash flow growth. This earnings growth would have enabled the company to steadily pay down the debt used to fund its expansion program. That would have put its dividend on a more sustainable foundation.

Unfortunately, the COVID-19 outbreak upended its grand expansion plans. As a result, cash flow will grow at a much more moderate pace this year. That forced the company to sell stock and issue higher-cost debt to shore up its financial profile. Even with those moves, leverage stood at an elevated 4.6 times debt-to-EBITDA at the end of the third quarter. That's well below its 4.0 times target and further away from its aspirational goal of 3.5 times. 

On the one hand, ONEOK's expansion-related spending is on track to decline to around $300 million to $400 million per year. That would enable the company to finance capital projects with excess cash flow after paying its roughly 10%-yielding dividend. However, it doesn't leave much excess for debt reduction. Thus, the company might follow many of its fellow pipeline peers and reduce its dividend to accelerate its debt reduction efforts.

High-risk high-yield energy stocks

ExxonMobil and ONEOK are trying to maintain their payouts despite all the challenges facing the energy sector. While their dividends may survive this year's market downturn, there is a high risk that both might end up reducing them to help pay down debt. They're not the best options for investors who rely on dividends to meet their financial needs.  

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.