Frequently Asked Question
Is a company allowed to reduce its dividends?
Yes. Companies have no restrictions - not from their exchange (NYSE, Nasdaq, AMEX, etc.), the SEC or the NASD - that require them to maintain a certain dividend level.
However, it should be noted that the market often views a company's dividend reduction as a negative sign, which could result in a drop in the price of the company.
For more on dividends, check out How Dividends Work for Investors and What is the incentive to buy a stock without dividends?
However, it should be noted that the market often views a company's dividend reduction as a negative sign, which could result in a drop in the price of the company.
For more on dividends, check out How Dividends Work for Investors and What is the incentive to buy a stock without dividends?
by
Investopedia Staff
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