Pitney Bowes Stock Dividend Cut Shows Investors Need Tools To Spot Collapsing Stocks

This morning Pitney Bowes Stock (PBI) plunged with income collapsing 50% from the same quarter last year. First-quarter net income to common stockholders was $67.51 million (33 cents a share) dropping from $158.67 million, or $0.79 a share last year. Net income from continuing operations falling year-over-year to $74.16 million, from $145.54 million. The dividend was slashed 50% to just 18.75 cents.

The Pitney Bowes Stock dividend was the main focus of so many investors that most lost sight of the stock itself. This is typical of investors who seek large dividends and fail to recognize the risk that comes with those dividends. Any investor who cared to take time to follow this stock by its chart could see that Pitney Bowes Stock was in trouble. Yet as Pitney Bowes Stock fell the board of directors continued to increase the dividend. Their business model was broken and I will give credit to many analysts who kept saying how the business model was damaged and warned investors not to buy shares of Pitney Bowes Stock.

PBI 10 Year Weekly Chart showing dividend payouts

Pitney Bowes Stock

I rarely give many analysts credit, but when it comes to Pitney Bowes Stock I have to say that the majority were negative. Morningstar however in a report on April 27 gave the stock 3 stars and rated it medium as risk indicating steady cash flow, recurring revenue streams, consistent dividend increases and share repurchases as pluses versus a lackluster rate of revenue growth as a negative when indeed their business model was broken and it was only a matter of time before revenue would reflect the changing economy.

Pitney Bowes Stock Holders

This morning I read a lot of articles about angry investors in at higher prices on Pitney Bowes Stock who were using the stock for dividend income and are now “shocked” at the dividend cut. I was surprised that the cut did not happen years earlier. Every indication pointed that this business model could not last and the company needed to diversify.

Simple Tools To Spot A Collapsing Stock

Could investors have saved themselves from grief with Pitney Bowes Stock even without analysts recommendations? Yes, two simple technical tools when applied properly have been warning investors since 2007, before the bear market, that Pitney Bowes Stock was in trouble and investors should stay away. These same tools can be applied to any stock. The rest of this article is a strategy discussion for FullyInformed Members on how to select stocks and what simple technical tools to quickly use to spot collapsing stocks to avoid setting themselves up for losses from the beginning of a trade.

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