Put $2k into a 'safe' dividend stock my buddy swore by. It tanked 30% in a quarter.

He kept saying the company was a cash cow, never missed a payout. So I bought into AT&T for the yield. Then they cut the dividend and the share price just fell off a cliff. Learned that a high yield can be a big red flag, not a free lunch. Anyone else get burned chasing dividends before doing their own homework?

4 comments

4 Comments

reed.elliot2mo ago

Oof, that's rough. Did you at least get a few dividend payments before they cut it? I got burned on a REIT a few years back that seemed solid, same story with the high yield. It really is a lesson you only learn the hard way sometimes.

sage3082mo ago

Isn't that how most traps work... too good to be true?

ellis.faith2mo ago

Yeah, it's like the financial version of a free puppy sign. You're just so focused on the cute payout you forget someone has to clean up the mess later. They dangle that big number in front of you knowing most people won't read the fine print about sustainability. My rule now is if the yield makes me do a double take, my wallet stays closed. The market doesn't just hand out free money.

seth_singh202mo ago

That "free puppy sign" line is perfect. My uncle fell for a similar thing with a shipping company, talking about their "reliable fleet" like it was a sure thing. The dividend got cut so fast it made his head spin.