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Dividends is a great word, especially for the investor who likes to not only use the possibility that a stock’s value will increase in per-share price, but also uses the fact that certain institutions pay out what’s called dividends on a quarterly basis.

Dividends are really a beautiful thing, because they essentially split certain earnings amongst shareholders and allow them to enjoy a little extra income, sometimes even in addition to an increase in the stock value itself. In the end, many times dividends are a win/win situation for stockholders as well as the institutions themselves, because they essentially raise capital from people who like dividend prospects, and the holders get the quarterly dividend payout benefit.

Well, many banks and financial institutions, two of the biggest dividend payers in the stock markets, are going to have to cut their dividend payouts or yields as of late because of the ongoing mortgage and bad credit crisis that is happening here in the US. Among those cited as making possible cuts are Citi Group, which may have to slash dividends to help make up for faltering profits, and to save money to put back into the business.

WaMu, or Washington Mutual, also recently announced it would be cutting its dividends, much to the chagring of stockholders, who soundly dumped off many shares and sent the stock price diving recently. Some may say it’s a bargain to buy these big institutions at lower prices, but that really is to be seen, especially since we don’t know how capable they will be to pull themselves out of this crisis and going forward we don’t know what the future holds for these companies.

It’s a shame really, but many times it is said that companies that have high dividend yields could in essence be shooting themselves in the foot in the end because the business profitability may not be able to sustain such great payouts, and they may find they need to cut dividends back, which could send stock prices diving.