dividend to be cut

Discussion in 'Trading' started by Wallace, Nov 21, 2008.

  1. i can look at a company's chart and know whether the price is rising or declining and
    guesstimate price targets, but is there any way of knowing - in advance, if a company
    will cut or withhold the dividend payout ?
     
  2. I think you need to look at a companies fundamentals. If it seems like the cashflow won't be able to meet the dividend then yes you can tell if a company will have to cut or suspend their dividend. Probably with some like GE, the stock might look cheap but with the financial arm being a big black hole, who knows how much exposure there is to losses. That sort of thing can easily lead to a dividend cut. Probably why the sp is being so badly beat up. Sometimes the technicals give good indication if something is wrong with the fundamentals, or at least if they can' be trusted.
     
  3. When the dividend yield based on the previous payout seems "high", especially after a sustained decline in the stock, chances are high that the dividend will be reduced partially or completely.
     
  4. thanks for the replies

    i think some peoples' stock buying decisions are based on the
    dividend being paid, but even if the dividend gets cut by 50%
    it's still paying more than mm rates and they won't sell, but i did
    hear there was stock dumping when dividends were cut and
    wondered if it could be seen as a 'major' type of liquidation