Whirlpool suspends dividend for first time in 70 years, stock plunges 20%

Appliance maker Whirlpool (WHR) is suspending its quarterly dividend for the first time in 70 years, a drastic move to preserve cash that sent its stock down 20 percent.

"This was a difficult decision, but it's a necessary one to strengthen our balance sheet and provide the flexibility to invest in our business," CEO Marc Bitzer said in a statement.

The dividend suspension follows a period of weak earnings that have pressured the company's finances. While specific earnings figures for the latest quarter were not immediately detailed in the dividend announcement, the move itself points to severe underperformance. The company also warned that higher prices for its appliances are coming as it battles rising costs and slowing consumer demand.

The halt to the dividend, a reliable payout for income-focused investors since the 1950s, raises significant questions about Whirlpool's financial stability. The market reaction was severe, with the stock's 20 percent plunge wiping out a significant portion of its market value and putting the shares on track for their worst day in recent history.

The suspension of the dividend is a clear signal of the depth of the financial challenges facing Whirlpool. For investors, this removes a key reason to own the stock, which has long been a staple in conservative income portfolios. The company's ability to navigate the current environment of high inflation and shifting consumer spending habits will be critical. Investors will be closely watching for the full earnings report and any further details on the company's recovery plan, with the next earnings call scheduled for late July.

This article is for informational purposes only and does not constitute investment advice.