Should You Buy A Company After A Dividend Cut?

Should You Buy A Company After A Dividend Cut?

Should you buy a company after it has cut its dividend? That’s the question Morgan Stanley’s analysts have tried to answer in a European Equity Strategy research note sent to clients today and a reviewed by ValueWalk.

Morgan’s research has been prompted by renewed investor interest in dividend cuts. Against a depressed earnings base, the market's dividend payout level looks high in a historical context and the median stock’s payout ratio is close to a 20-year high. On a pan-European level, the payout ratio has exceeded 2009 levels. It’s also important...