Economic Downturns
During economic downturns or financial distress, companies may cut or suspend dividends to conserve cash.
This can be particularly detrimental for homeontheweb.org investors who rely on dividend income for their living expenses.
- Example: During the 2008 financial crisis, many companies, including major banks like Bank of America, cut or suspended their dividends to strengthen their balance sheets.
Business Challenges
Company-specific issues, such as declining sales, increased competition, or operational challenges, can lead to dividend cuts.
Investors in these companies may face reduced income and declining stock prices.
- Example: General Electric (GE) significantly cut its dividend in 2017 and again in 2018 due to financial struggles and restructuring efforts, leading to substantial losses for dividend-focused investors.