How is it possible Citi group is still paying dividends when it is reporting losses?

Posted by admin on April 6th, 2010

With regards to Citi’s recent loss report for the 4th quarter, how is it
possible for the company to pay dividends (even though dividends are slashed by
41%)? Shouldn’t a company only pay dividends when they are profiting?

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Posted in Dividends Tags: 4th quarter, Dividends, loss report

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One Response to “How is it possible Citi group is still paying dividends when it is reporting losses?”

1. zman492 says:

   April 6, 2010 at 9:51 pm

   <<<How is it possible Citi group is still paying dividends when it is reporting losses?>>>

   A company can have losses and still have a positive cash flow that can be used to pay dividends.

   Even if a company does not have a positive cash flow, it can borrow money to pay dividends.

   <<<Shouldn’t a company only pay dividends when they are profiting?>>>

   Opinions vary. I had a grandmother who’s primary income for many years came from dividends from a single company. If dividends had been eliminated she would have been hurt badly. Public companies are supposed to look out for the best interests of their shareholders, including shareholders like my grandmother. On the other hand, borrowing money to pay dividends weakens the company’s future prospects, hurting shareholders looking for growth.