Dividends: Wall Street's battered status symbol
As a market indicator, a wave of dividend cuts is an indication that many companies are troubled
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COCA-COLA pays steady dividends. It has done so since 1920. In fact, it has increased its dividend in each of the last 50 years.
"Investors look at that record, and they count on it," said Douglas J Skinner, an accounting professor at the University of Chicago. "After a while, the dividend becomes sacrosanct."
Cut dividends? For Coca-Cola, that's almost unthinkable. Investors would probably see a dividend cut as a sign of trouble - a clear indication that the company is short on cash. So it's not surprising that despite a crimp in its cash flow in recent years, Coke hasn't wavered on its dividend. Many other companies would love to say the same, but they can't.
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