Post financial crisis period or post oil/commodities bust period that began couple of years ago, many Blue Chip companies, including many banks and oil and mining companies that were once considered the staple of dividend distribution, announced dramatic cutbacks in dividends. As expected, the markets punished these stocks severely and many of these companies that have not returned to their former dividend policies (with some recent rise in dividend levels for U.S. bank) operate with depressed stock prices.
Question:
Do you believe that these companies’ dividend cuts, especially the ones in the banking sector, is a direct outcome of classic financial forecasting that is showing a dark future for many years to come or do you believe that these decisions are more short-term reflecting the current extraordinary economic environment?