Investopedia: Can E.On Maintain Its Fat Dividend Through A Difficult Restructuring?

Experienced dividend investors know better than to just take a fat dividend yield for granted. While there certainly are opportunities every so often to pluck an overlooked or underappreciated income story, oftentimes high yields are best read as a flashing “danger” sign.

That brings me to German utility company E.On (Nasdaq:EONGY). A dividend yield of nearly 9% is certainly attractive these days, but E.On is still in the early years of a difficult transition that is seeing the company cut costs and scale out of its traditional generation business in favor of newer opportunities like renewable generation, oil/gas exploration, and overseas generation. On balance I'm bullish on E.On's prospects for remaking itself over the next three years, but I would caution investors that the dividend could get cut, and possibly cut substantially, before the process is complete.

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