Investing term

What is Dividend cut?

When a company reduces or suspends its dividend, usually because earnings or cash flow can no longer cover it.

Often the last domino, not the first — it tends to follow a payout ratio creeping over 100%, a dividend funded by borrowing, or a payout frozen for years because there was no spare cash to raise it. The share price usually falls hard on the announcement, because the cut confirms the trouble the market already suspected. Famous examples: General Electric (24¢ to 1¢ across 2017–18) and AT&T (≈47% in 2022).

Dividend cut is taught hands-on in Stage 8 — Corporate Actions: What Lands in Your Account.

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Related terms

AcquisitionOne company buys another. The bought company's shares are converted to cash, acquirer stock, or a mix at the closing price.Carve-outA parent company sells part of a subsidiary in an IPO, keeping a stake.Corporate actionAny event initiated by a company that changes its securities or distributes value to holders.Cost basisWhat you originally paid for a holding, used to calculate gains and losses when you eventually sell.
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