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S&P has reported that the dividends of companies in its S&P 500 index are being cut at the fastest rate in fifty years. A report by the Associated Press says that even Dow Chemical (DOW), which has not dropped its dividend since 1912, may need to reduce its payout.
A large number of investors purchased stocks for their yields. People on fixed incomes often use dividend payments to cover basic living expenses. Other investors look at companies paying dividends as "safe havens". Their share prices may go down, but at least holders get a quarterly check. It is a good system until the firms with impressive yields become concerned that they are running low on cash.
24/7 Wall St. examined each company’s sales, operating margins, cash and cash equivalents, long-term debt, receivables and payables, and its overall long-term health and the viability of the markets it does business in, to determine each firm’s ability to pay dividends..
