How can a dividend be a risk?
Most people believe that companies that pay dividends revel in financial health. Why then put fear into the hearts of shareholders with risk statements such as this:
“There can be no guarantee that we will pay dividends or repurchase stock.”
Every normal shareholder knows that the board of directors decides on the payment of dividends and that any changes can affect the stock price both positively and negatively. Yet instead of stating this in a neutral manner somewhere in their annual reports, they decide to make it a material risk and keep all aspects negative.
Some companies pay dividends but have no dividend risk: Johnson and Johnson, AstraZenica GlaxoSmithKline, Sanofi, and Novartis. Others like Abbvie and Bistol Myers have a dividend risk.
As usual there is no explication of these differences, but above all no real explication why these companies think a dividend is a material risk.