Warning Signs of an Imminent Dividend Cut

One important lesson we learned from the 2008-2009 financial crisis was that it didn't matter how long a company had increased its dividend, tough economic times could push it to cut its dividend. In most cases the companies' investors were not surprised because they saw the early warning signs that indicated a dividend cut was imminent. Here are three signs that a company is heading toward a dividend cut:

I. Change In Business Conditions
An abrupt or permanent shift in a company's business model as a result of business conditions could lead to a dividend cut. During the financial crisis, virtually all businesses experienced an adverse change in business conditions. However, the pertinent question is to what degree? Consider these two examples:

Source: Dividend Growth Stocks

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