Question: Tying stock dividends to performancehas this happened before?
Companies like Silver Wheaton and Newmont mining recently tied their stock dividends to the price of silver and gold. Is there any precedence for this in the broader market? In other words, has a company outside the mining industry ever done anything like this before?
Answer:
Not one that I can remember, and I've been around a while. But then that also makes my memory suspect, now doesn't it?
The first instance of this that I recall was Freeport some 25 years ago issued a preferred where both the dividend and the maturity price was tied to the price of gold. They weren't a perpetual, they had a mandatory redemption.
one of the fundamental indicators you look at is an unbroken history of dividends with a rising yield with time....to reduce your dividend would be the equivalent of saying HEY, WE ARE HAVING LESS THAN GOOD TIMES RIGHT NOW...and the share price would probably fall.
Companies don't like to do that unless they have to.