Understanding Equities - Question 81

Florida Power and Light (FPL) cut my dividend by 34%. Is there any indicator that could have alerted me in advance? I don’t have a broker.

One of the indicators that is commonly used to warn investors that a company is going to cut the dividend is that the dividend becomes greater than the earnings of the company. When the dividends of the utilities are approaching 90% or more of its earnings, that dividend may be in danger of being reduced or eliminated. This was the case with FPL.