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Declining Dividends Nov 25, 2008 Our favorite dividend stock is taking the inevitable plunge into the world of decreasing dividends. The highest we bought the stock at was around $33. Friday it reached the depths of $1.69 - not surprisingly, the year's low for the stock. It is also not surprising the company has decided to decrease the dividend for the first time EVER! Although it is a shame the dividend will decrease, one can take solace in knowing that the decrease will not happen until after the new year which will allow all those reinvested dividends to purchase a healthy number of shares with this one last yippee dividend distribution coming on December 10th distribution date. Am I worried about the stock due to the declining dividend? No. It is a financial stock and although it has hit a couple bumps in the road, it's not like Citigroup which was bailed out by the government today! Nor, does it need to be bailed out. The company made a couple mistakes which will cost it under $200 million dollars. Considering the company is worth 4.5 billion, it can handle the hit. The price of the stock is so low currently because of the market's volatility and the sector it belongs to more than a deserved hit to the company. It is important to keep things in perspective and, when possible, to take advantage of this tumultuous time. |
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