Seeing a company that you own shares in cutting its dividend is a sure sign of trouble. In most cases, a dividend cut shouldn't come as a complete surprise. Dividend cuts often come when times are known to be rough. The dividend cut itself is usually a confirmation. Companies may be experiencing declining revenue or some other type of unexpected expense that forces them to make tough choices in an effort to raise cash. Cutting the dividend saves the company the cash that would otherwise be paid to shareholders.
Here are three companies that have made significant cuts to their dividend recently and should be avoided for the time being: Arch Coal (NYSE:ACI) - Arch primarily deals in the production of met coal in several states. Met coal prices have recently dropped to a six-year low of around $120 a ton on increased global supply. Frontier Communications (NASDAQ:FTR) - Frontier cut its dividend from $0.25 to $0.188 in 2010 and again to $0.10 in 2012. Avon Products (NYSE:AVP) - The beauty products giant's biggest problem is quite simple -- it can't find enough Avon ladies.
Source: Seeking Alpha
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