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Dividend Cut, What Do I Do?

Published Thu, 14 Feb 2019 08:52:41 -0500 on Seeking Alpha

A dividend cut is the worst things that could happen to a dividend investor. Sometimes, management decides to break their promise and fails their shareholders by slashing their dividend payment. When such an event happens, we are left with a big hole in our portfolio. A dividend cut is not only a reduction of your revenue but also leads to a capital loss. There are techniques to avoid dividend cuts, but no strategy is perfect. We can all suffer from a dividend cut. Today, I'll discuss how I manage dividend cuts in my portfolio. I hope it will give you a few tricks to manage yours.
Why does the company cut its dividend in the first place? Interesting enough, there are many reasons why a company would decide to ax its distribution.
The first one is obviously because things are not going so well. A company could face many headwinds at the same time and generate a lot less cash flow than expected. Imagine a company with new competitors, reduced margins, or stuck with a major scandal or callback. When an enterprise has a business model built around a factor it doesn't control (this is the case with many oil exploration companies), a sudden price move could also push the company to revise their budget. General Electric (NYSE: GE), Buckeye Partners (NYSE: BPL), Owens & Minor (NYSE: OMI), and Anheuser-Busch InBev (NYSE: BUD) all cut their dividend because of poor management.
Second, the business could need additional money for a specific project. While a dividend cut is more... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
BUCKEYE PARTNERS LP 34.34   0.0 -0.40 3.00 8.88
OWENS & MINOR 4.84   0.0 -7.32 0.01 6.22
ENBRIDGE 36.52   31.5 1.16 2.22 6.01
SEAGATE TECH 47.68   8.3 5.76 2.52 5.29
QUALCOMM 56.60   35.8 1.58 2.48 4.48
L BRANDS 26.58   11.5 2.31 1.20 4.43
L. BRANDS 26.58   11.5 2.31 1.20 4.43
ANHEUSER-BUSCH INBEV 81.25   36.8 2.21 1.35 1.67
APPLE 186.12   15.3 12.16 2.92 1.61
MICROSOFT 115.91   26.9 4.31 1.84 1.61
GENERAL ELECTRIC 9.96   0.0 -2.62 0.04 0.40
CORUS ENTERTAINMENT 4.30   0.0 0.00 0.00 0.00

BUCKEYE PARTNERS LP - BPL
BUCKEYE PARTNERS LP - BPL  


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