There are various reasons why a company might choose to cut or suspend its dividends:
Financial Struggles: A company facing financial difficulties might cut dividends to preserve cash. This is often seen during economic downturns or industry-specific challenges. Debt Obligations: Companies may need to redirect cash to pay down debt, particularly if they are at risk of defaulting on their loans. Reinvestment Needs: Sometimes, firms cut dividends to reinvest the saved cash back into the business for growth opportunities, such as new projects or acquisitions. Regulatory Requirements: In some cases, regulatory constraints may force companies to reduce dividends to maintain adequate capital reserves.