One of my main objectives as a dividend growth investor is to seek investments which have a strong business model that throws out enough cash flow that could support consistent dividend increases. My secondary objective is managing risk within my portfolio, by eliminating stocks, which have cut their dividends, by not reinvesting the dividends in companies that freeze their dividends and by diversifying my investments across sectors, asset classes, strategies and time. So far, based off my research of performance of dividend stocks based on company policy in addition to my experience over the past few years, I have been able to grow my income stream successfully.

Recent evens have reinforced my ideas on selling after a dividend cut. However an article from fellow blogger DividendsValue presented an interesting analysis in “Should You Sell A Dividend Stock After A Dividend Freeze?”. As an investor who is always looking to improve my performance, this article made a lot of sense. Dividend freezes, or the failure of a company to increase its dividends once an year, have certainly been a strong forecasting indicator of future dividend cuts.

So far I have had several stocks on my radar which have frozen their dividends, only to cut them a few weeks later:

General Electric (GE) failed to increase its dividends on December 2 when the stock was trading at $17.61. The company cut its dividends on February 27, when the stock was trading at $8.51.

State Street (STT) announced that it wouldn’t be raising its dividends on December 18, when the stock was trading at $39.06. The company cut its dividends on February 5 when the stock was trading at $27.54.

Gannett (GCI) failed to increase its dividends on July 31, while the stock was trading at $18.12. The company announced a 90% dividend cut on February 25, when the stock was trading at $3.75.

Pfizer (PFE) failed to reward shareholders with an increase in dividends on December 15, when the stock was trading at. The company announced merger talks with Wyeth on January 26 as well as a 50% reduction in dividends, which drove the share price to $15.65.

Bank of America (BAC) affirmed its payment on July 23 when the stock was trading at $33.30.