Dividend Cuts: Warning Signs and Real Examples

Every dividend investor eventually owns something that cuts its payout. It feels like a betrayal: the income you were counting on shrinks, and the share price usually tumbles too. But dividend cuts rarely come out of nowhere. Looked at afterwards, most of them were years in the making, and the warning signs were sitting in plain view. Let’s look at five.

General Electric (2017 and 2018)

For decades GE was the bluest of blue chips and a dividend favorite. Behind the scenes, its finance arm GE Capital had grown enormous, its power business was hit by a collapse in demand for gas turbines, and its pension and insurance obligations were huge. Cash flow from its industrial businesses fell well short of the dividend. In November 2017 GE halved its quarterly dividend to 12 cents. A year later it cut it again, to a single cent.

The signs: free cash flow that didn’t cover the dividend, a sprawling business that was hard to understand, heavy debt and repeated reassurances from management.

AT&T (2022)

AT&T spent more than $80 billion buying Time Warner in 2018 on top of its earlier purchase of DirecTV, piling on debt that at one point approached $180 billion. Its dividend, raised for over 35 years, stopped growing in 2020. In 2022, when it spun off WarnerMedia, the payout was cut roughly in half.

The signs: big debt funded acquisitions, a dividend that stopped growing, and a yield that climbed well above its peers as the price slid.

Intel (2023 and 2024)

Intel fell behind rivals in chip technology and committed to spending tens of billions of dollars on new factories to catch up. In February 2023 it cut its quarterly dividend by about two thirds, from 36.5 cents to 12.5 cents. In August 2024, after disappointing results, it suspended the dividend completely.

The signs: falling market share, shrinking profit margins and a huge capital spending plan that competed with the dividend for the same cash.

3M (2024)

3M had raised its dividend for more than 60 years. Then came multi-billion dollar settlements over military earplugs and “forever chemicals” (PFAS), slow sales growth and a plan to spin off its healthcare business. After the spin-off in 2024, 3M reset its dividend to roughly half the old level.

The signs: years of token raises, flat sales, mounting legal liabilities and a restructuring that was always going to change the payout.

Walgreens (2024 and 2025)

Walgreens raised its dividend for over 45 years. But retail pharmacy margins kept shrinking, store traffic fell and an expensive push into healthcare clinics lost money. In January 2024 it cut its dividend by almost half. In 2025 it suspended the dividend and agreed to be taken private.

The signs: shrinking profits in the core business, a payout ratio climbing past 100% of free cash flow and a yield that kept rising as the price fell.

What they had in common

Notice what’s missing: none of these were surprises to anyone reading the cash flow statements. The cuts arrived when the numbers had been bad for a while, and when management finally had a reason, like a spin-off or a new strategy, to reset.

Why the price falls before the cut

By the time a cut is announced, the share price has usually fallen a long way already, because investors saw the same warning signs you can. That’s why the yield often looks highest just before the cut: the price has dropped and the old dividend is still being paid. It’s also why the price sometimes rises on the day of the announcement. The uncertainty is over.

What to do when a holding cuts

1. Don’t react in the first hour. The news is out, and the price has likely already moved.
2. Read why. Is the cut freeing up cash to pay down debt or invest in a sound plan? Or is the business shrinking with no fix in sight?
3. Ask whether you’d buy it today at today’s price and today’s dividend. If yes, holding is reasonable. If no, what you paid shouldn’t keep you in it.
4. Think about taxes. In a taxable account, selling at a loss can offset other gains. See Tax-Loss Harvesting for Dividend Investors.
5. Learn from it. Which checks would have caught this? Add them to your routine.