If you're handy with dividend math, you know that as a stock price rises, its dividend yield drops, and vice versa. That's because the dividend yield is a result of the annual dividend divided by the current stock price. You probably also know that while the stock price changes many times every day, the dividend amount changes only every year or two, on average.
Here's one thing that many of us tend to forget, though: Although we're used to seeing dividend payments rise over time, they also sometimes fall. Look at McDonald's
What's going on? Well, this phenomenon isn't new. When companies and industries struggle, they'll often reduce or even eliminate their dividends. Ford
What to do
Fortunately, figuring out which dividends are safe and which aren't is not entirely a crapshoot. You can look at a company's payout ratio, for one thing. Or look at its industry. Right now, financial companies are in a pinch, and Citigroup
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Longtime Fool contributor Selena Maranjian owns shares of McDonald's. Washington Mutual is a Motley Fool Income Investor recommendation. Intel is a Motley Fool Inside Value recommendation. Try our investing services free for 30 days. The Motley Fool is Fools writing for Fools.