Six tips for announcing a dividend cut

How to break the bad news to investors

When Rolls-Royce announced that it would be cutting dividend payments for the first time in 25 years – by 50 percent, to 7.1p ($0.10) per share – it looked unlikely that investors would take the news well.

Just a few weeks on, however, and despite analysts predicting a 30 percent reduction, Rolls-Royce’s share price is now the healthiest it has been since November 2015. Commentators have suggested a number of reasons are at play, though many agree that unchanging guidance and a lack of any profit warnings are crucial elements. 

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