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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (36503)	1/21/2010 11:38:36 AM
From: MCsweet	1 Recommendation Respond to of 78758

I see HRP cut the dividend in Jan 09 in the middle of the financial crisis. I see they also cut in July 2000 after they paid out a large special dividend in 1.688, which seems reasonable after depleting the capital base. Is there something else you are talking about? If you issue stock that forces you to cut your dividend, then your top holders will not be happy campers. They can live with incompetence, but not outright thievery. I just don't see any rational management doing that unless a company's survival is at stake. Moreover, when you access capital via a stock offering, you have to sell to underwriters and institutions and pitch them on your company. A pitch going, hey we are going to issue x million shares so we can cut our dividend isn't going to fly. And if you lie about it and then do cut your dividend, you will have great difficulty coming to the capital markets ever again. That's a bridge management does not want to burn. MC