The trickle of pub companies abandoning dividend payments is fast turning into a deluge. Of the big guns, Punch Taverns and Mitchells & Butlers have both scrapped payouts, and, while Greene King is expected today to hold its interim dividend, Marston’s is tipped to, at best, cut the final dividend when it reports prelims on Friday.

Such a situation would have been unthinkable a couple of years ago. While some commentators had raised an eyebrow at the large amounts of debt that some of these companies took on board during the good times to fund acquisition sprees, the theory was that they were so cash-generative that large debt burdens were not an issue.

A similar story pervaded the world of private equity-backed pub chains. The buyouts that created Barracuda Group and Orchid Group were forged in very different times, both in terms of the prices paid and the amount of debt taken on board. Refinancings are now on the agenda for both companies, but, with the banks now routinely appointing restructuring advisers to handle such a process, they will be bracing themselves for a painful outcome.

But just because large numbers of heavily geared companies are being forced to preserve their cash in order to reduce debt, it does not mean that the pub sector is permanently damaged goods. Yesterday, the Capital Pub Company, though admittedly a tiddler with 24 unbranded pubs in Greater London, showed the merits of a well-run, robustly financed business focusing on what I would call proper pubs, serving good beer, wine and food.

Not that Capital is immune from the trading downturn. Clive Watson, the chief executive, conceded that 2009 was likely to be even more challenging than this year, when underlying trading was no better than flat, and in that context he, too, has opted to scrap the interim dividend. While he has left himself the option of using the cash to pick up additional pubs as prices come down – the Fleurets index suggests London freehold values have fallen by 13 per cent in the past year – debt reduction is the main rationale.

Of the other big so-called pubcos, Enterprise Inns is the only one to have maintained its dividend, although given the market’s reaction it must wonder why it bothered. Most analysts believe the tenanted operator will have to admit defeat next time around, while JD Wetherspoon is also under growing pressure to halt further payouts as debt repayment deadlines loom.

On the day that Morgan Stanley, house broker to Punch, admitted that “for many it is uninvestable”, it is tempting to look at the recession and take a similar view of the wider pub sector. That would be harsh on the many well-run operators offering long-term value, but for now buying pub shares looks too risky.

Reed Elsevier

Reed Elsevier is Europe’s biggest media business, worth nearly £12 billion, but with none of the profile to match. It specialises in electronic information, which has by and large proved pretty resilient in the downturn. Its shares may be down 23 per cent this year, roughly in line with Pearson and Thomson Reuters, but that is far better than the 37 per cent fall of the FTSE 100 and the far steeper slides by advertiser-funded media groups.

Sentiment is dominated by whether Reed can get a half-decent price for RBI, its Computer Weekly to Farmers Weekly division, which is the only part of the Reed portfolio to get any advertisng revenues. The price started at £1.25 billion before the credit crunch, but the expectation has halved, reflecting RBI’s deteriorating prospects. Meanwhile, the shares have overcompensated, falling by more than £2 billion in both London and the Netherlands, where the company is jointly listed.

That reflects the general decline in sentiment, although Reed’s scientific, medical and legal information are not overly sensitive to the economic cycle. At 13 times this year’s earnings, the stock remains relatively expensive compared with most equities, although it is in line with Pearson, and at a discount to Thomson Reuters, despite the latter’s exposure to financial markets.

A low disposal price for RBI, or even a pulled sale, is probably broadly priced into the shares now, but there are few catalysts to lift the share price. In a tough market, Reed is worth holding for its defensive qualities.

Aberdeen

Aberdeen Asset Management’s increase in both profits and funds under management during the most turbulent period for investment markets in living memory is some achievement.

Martin Gilbert’s Edinburgh-based fund manager insulated itself against the worst of the storm by heading for new markets in continental Europe and Asia Pacific while concentrating on institutions, rather than retail investors, as clients. As a result, it improved revenues by a quarter to £430.1 million in the year to the end of September, while pretax profits edged up to £95.1 million and assets grew by £15.8 billion to £111.1 billion.

True, the acquisitions of Goodman Property Investors and Germany’s DEGI accounted for £12.8 billion of the additional funds, but Aberdeen still enjoyed net inflows while other managers saw institutions withdraw money in their droves. The shares have held up well this year, but suffered yesterday from fallout from New Star Asset Management, which has gone into talks over its debt.

Aberdeen is a potential suitor of New Star, but for now it is taking the only action possible. Having already sought annual operating cost savings of £57 million, it plans to chase a further £20 million of cuts. Most will come from data management and IT efficiencies, and job losses will be few. The presence of Mitsubishi, of Japan, as a 10 per cent investor, with the option to go to 19.9 per cent, increases stability. Hold until markets stabilise.

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