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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 40.97   0.0 -0.62 3.00 7.34
ENBRIDGE 37.47   23.3 1.61 2.20 5.92
SEAGATE TECH 43.19   8.4 5.14 2.52 5.64
L BRANDS 24.84   10.9 2.28 1.20 5.58
L. BRANDS 24.84   10.9 2.28 1.20 5.58
QUALCOMM 66.21   35.0 1.89 2.48 3.58
ANHEUSER-BUSCH INBEV 82.76   23.7 3.49 1.66 2.01
APPLE 178.97   15.0 11.89 3.08 1.69
MICROSOFT 126.24   28.0 4.50 1.84 1.44
GENERAL ELECTRIC 9.45   0.0 -2.07 0.04 0.40
OWENS & MINOR 3.48   0.0 -7.68 0.01 0.28
CORUS ENTERTAINMENT 4.60   0.0 0.00 0.00 0.00

BUCKEYE PARTNERS LP - BPL
BUCKEYE PARTNERS LP - BPL  


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