t by the company. Most investors view dividends as anticipating future earnings, it's no wonder that such a cut in dividends should be taken by investors as bad news causing the stock price to fall.FPL is undoubtedly a healthy utility, so the company did it's best to spell out to investors why it had taken such an unusual step. FPL pointed to the prospect of increased competition in the industry, and argued that the company's historically high payout ratio was no longer in shareholder's best interest. Along with the debt reduction plan and share repurchase program outlined above FPL explained that this would reduce shareholders' taxes.Once the initial shock wore off and analysts considered FPL's reason for the dividend cut they concluded that the company wasn't forced to cut it's dividend due to short term financial weakness, but rather as a strategic decision to cut the dividend level to reflect the need for more financial flexibility in an increasingly competitive and deregulated utility environment.As should be expected in a rational market, within a month of the announcement, the stock price had more than recovered it's initial loss....
