The Globe and Mail reports in its Saturday edition that BCE's dividend is in trouble: The big telco has been paying out more to shareholders than it is generating in profits, and some analysts have begun to float the idea that a cut to the quarterly distribution might be necessary. The Globe's David Berman advises, however, that investors should not dump the stock. He says yes, dividend cuts leave shareholders with depleted income streams and they raise questions about a company's strategic direction. There are at least two good reasons why investors can do better by embracing stocks with slashed payouts rather than selling them when share prices are already depressed. Even a deep cut should not come as a surprise to investors, which means that the stock might be sitting near a low point. That is never a good time to bail out. And if BCE does not cut its dividend, you are getting a very good payout. The other reason to stick with BCE: Companies that have slashed their dividends can rebound. During COVID-19 in 2020, at least 10 high-profile Canadian companies -- including Suncor, RioCan and Sleep Country -- slashed their quarterly payouts to preserve cash. Within a year, this group of stocks was up more than 56 per cent.
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