The Need For Dividend Diversification

Some investors who hadn't thought of diversifying dividends may have been caught short by the events that took place in 2008-2009 where a number of companies drastically cut their dividends. A number of the dividend stalwarts that had previously increased dividends for many years such as Citigroup (C), Bank of America (BAC) and General Electric (GE) were all forced to make major cuts to dividends. The interesting thing about the dividend cuts that took place during 2008-2009 was that they were primarily associated with companies in the financial services sector. I read a very interesting article on Seeking Alpha by Robert Schwartz which indicated that 71% of dividend champions actually maintained or increased their dividends during 2008. Many of those that cut their dividends were actually financial services companies. If you were unable to pick the impacts of the implosion in mortgage lending would have on bank dividends,... Read more