-->Though Delphi is an extreme example, it is not unique. Consider the findings of a major academic study published several years ago that looked at dividend eliminations over a 25-year period. Its authors found that the stock of the average company eliminating its dividend lagged the market by 3.4% immediately after that omission was announced and by another 11.0% over the subsequent 12 months. (Click here to read the study)

These historical results help us to understand why companies usually go to such great lengths to avoid eliminating their dividends. As Standard & Poor's notes,"Once companies institute a dividend, we believe they try very hard to maintain it. Even though dividends are not an obligation of the corporation, most boards seem to act as if there were an implicit agreement to continue paying."

Given this background, recent data from S&P send a potentially disturbing signal. Last month, 11 firms eliminated their dividends. That may not seem like a huge number, but the average over the last three years has been for fewer than three to do so in any given month.



In fact, according to S&P, you have to go back to April 2002, during the bear market, to find a month with as many dividend omissions as September.

While September's large number of dividend omissions is just one piece of a larger puzzle, there are other worrisome pieces, too. Another from the dividend arena is the number of companies that are increasing their dividends. During the third quarter, according to S&P, the number of firms increasing their dividends was no greater than in the third quarter of 2004.



<ul> ~ http://www.marketwatch.com/news/story.asp?guid={A812A44A-F5F9-4EC3-9690-EDDC8E46</ul>