10-04-2016, 08:11 AM
(10-04-2016, 04:59 AM)Amos Wrote:(10-03-2016, 05:16 PM)crimsonghost747 Wrote: ...but it's just there to prove that one or two decreases (as long as it's for acceptable reasons) won't bring down your whole portfolio.
What do you consider as acceptable reasons?
For example, I'm fine with a highly cyclical company reducing the dividend during the bad years. This would of course mean quite large increases when the times are good.
Another example could be a company that is facing a big one time expense, such as an acquisiton. I'm completely fine with a company lowering their dividend after an acquisition in order to bring the debt levels back to their target. Once again in this scenario I would assume the company to bring the dividend back to the old levels, or quite possibly higher, after a short while.
I guess overall it's more about estimating if the decrease is a permanent one (in which case there is probably negative earnings growth over the long term, this would be a reason to sell) or if it's just a thing that will pass.