But there are good reasons to suspend dividends voluntarily. It's wise to conserve cash when revenue is under pressure and the equity market might be hard to rely on as a source of funds. A company risks losing the support of society if it pays out cash to shareholders while forcing pain on staff, or while benefiting from taxpayer-funded crisis measures.
The trickier issue is individual shareholders who have chosen to use stock-based portfolios for income even though dividends are discretionary. The marketing hype of the finance industry may be a culprit here, having persuaded investors that stocks are like"magic bonds", as pensions expert John Ralfe has argued.
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