One of the worst things that can happen to a stock is a dividend cut. Many investors who invest in a company are attracted by the dividend. If the dividend payments are stretched and the dividend is cut during a recession or a temporary sector downturn, many investors prefer to switch for some other holding, even if that might not be the smart thing to do. Additionally, a lower or no dividend yield eliminates the interest from new dividend investors and disables dividend reinvestment plans. The consequence can be terrible for a stock.
