Two months ago, Dow Chemical
Dow joins a growing list of blue-chip names that have been forced to cut (or virtually eliminate) their dividends, including Pfizer
It made sense when I said it …
Admittedly, things have changed since Liveris' statement: Kuwait's state oil business pulled out of a joint venture with Dow, taking with it the promise of $7.5 billion in financing. That caused Dow to miss a milestone in its proposed takeover of Rohm & Haas
However, Mr. Liveris was insistent that he wouldn't need the funds from the joint venture to complete the takeover, banking on $4 billion in financing from Berkshire Hathaway
Mr. Liveris really should have known better than to make such a fragile promise in this environment. After all, circumstances are apt to change rapidly and unexpectedly in the worst financial crisis since the Great Depression.
Dividend cuts can strike at any time
Dividend investors need to carefully validate any executive's promises to maintain a company's dividend right now. CEOs can be fickle creatures, particularly once they paint themselves into a corner trying to avoid any of several unpalatable options. Will General Electric's
Further (far more palatable) Foolishness:
In this market, sustainable dividends will be a big component of future shareholder returns. The team at Motley Fool Income Investor can show you how to build and manage a portfolio of stocks that produce a solid payout. To discover the team's top five recommendations for new money now, take advantage of a 30-day free trial today.
Alex Dumortier, CFA, has no beneficial interest in any of the other companies mentioned in this article. Bank of America is a former Motley Fool Income Investor pick. Berkshire Hathaway is a Motley Fool Inside Value and Motley Fool Stock Advisorselection. The Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.