Chick-Fil-A and My First Dividend Cut!
Is the sting worth the pain?
Total Portfolio: $56,027
Day 196 | $22,076 (Fidelity)
Day 563 | $33,960 (Ally)
Have you ever had a craving hit hard—like those golden 12-count nuggets dripping with Chick-fil-A sauce and a side of waffle fries, only to pull up and realize it’s Sunday… and they’re closed?
Or maybe you’ve been where my wife and I were the other day. We put in a pickup order at one of our favorite local spots, mouths watering for a juicy burger and crispy tots. Right as we rolled up to grab it, ping: “Order canceled, sorry!”
The disappointment stings, doesn’t it?
That’s the best way I can describe how I felt on March 12th when I experienced my first dividend cut. After two years on my walk to wealth, I felt that sting when Armada Hoffler Properties (AHH), one of my favorite Real Estate Investment Trusts (REIT), slashed its quarterly dividend by 32%.
But after taking a Sunday off to let it all sink in (see what I did there?), I started to wonder if that sting could signal a chance to regroup and come back even stronger.
Let’s unpack why companies do this, why it might pay off, and what I am doing now with my shares of AHH.
Why Companies Cut Dividends
Think of a company as a kitchen whipping up cash instead of nuggets. Dividends are the plate they serve to shareholders, but when the stove sputters, they might hit the brakes.
Here’s why:
Cash Squeeze: If revenue dips—like fewer tenants paying rent at AHH’s properties—there’s less to spread around. They may trim the dividend to keep the lights on.
Rising Costs: High interest rates in 2025 mean bigger loan payments. AHH’s got debt to manage, so they might cut to ease the pressure.
Safety First: Holding back builds a cushion, avoiding worse moves like selling properties cheaper in unfavorable markets.
Future Bets: Cash may be needed to fund growth—like AHH’s new properties, such as Southern Post (a 4.27 acre strip mall transformed into a vibrant hub that blends residential, commercial, and retail spaces).
AHH’s Southern Post development from a recent investment presentation.
AHH labeled this cut “strategic” (per @DailyREITBeat on X), not a crash.
That’s a reassuring opinion, but still… my annual payout per share fell from $0.82 to $0.56, and the stock took a hit—dropping nearly 14% in the aftermath. When it hit, I wasn’t quite sure what to do next.
Is There a Silver Lining?
Those forbidden Sunday nuggets, I mean… the loss dividends—hurt, but maybe there’s a plan. A cut can pave the way for better days if the company uses it right.
Here’s how it could play out:
A Stronger Base: AHH’s keeping $5.8 million yearly from this cut—money to tackle debt or shore up weaknesses, setting up a sturdier future.
Lower Stock Price: The 14% drop slashed AHH’s price (from $9.18 in February 2025 to $7.69 on March 21st). If it rebounds, that could be a huge win for my portfolio. Before the pandemic, AHH was trading for over $18 a share.
Growth Ahead: That cash could boost AHH’s projects, lifting value over time—like planting seeds for a bigger harvest.
My favorite REIT, Agree Realty (ADC) has walked this path before. In 2011, it cut its dividend 22%—from $0.51 to $0.40 quarterly—during rough waters. It redirected cash to buy prime retail properties (think Walmart leases). By 2024, ADC was paying a monthly dividend and hit $0.25 monthly ($1.00 quarterly), and its stock soared over 300% in a decade. Pain turned to payoff.
So… Where Do We Go from Here?
I think AHH has a winning combo with its vibrant mix of office, shop, and apartment communities. And while the dividend cut stings, it gives them a chance to reset—maybe to wrangle debt or finish projects that could have big payouts on the other side.
After two years of owning the stock, I felt the sting, but that 14% drop? I see a potential deal and today—I grabbed more shares, betting on an ADC-style comeback.
If AHH turns that $5.8 million into momentum, there could be a big payback to patient investors. And while they don’t have that 8%+ yield any more, they are still paying close to 6%!
Of course, there is always a chance they continue to struggle in the current economic conditions. A long term mindset helps ease the risk, but you never really know, do ya?
The Takeaway
Dividend cuts hit like a canceled burger order—frustrating when you’re counting on the payout. But ADC shows a cut can be a detour to something bigger. For AHH, it’s a gamble: Is the sting worth the pain?
Until next time, keep walking!
Jeremy ✌️
And before you leave…
Disclaimer
This article is for informational and educational purposes only. I am not a financial advisor, broker, or tax professional. The information provided reflects my personal opinions and experiences as an individual investor and may not be accurate or current. All investment strategies and investments involve risk of loss. Any ideas presented may not be suitable for all investors and may not take into account your specific investment objectives, financial situation, or needs. Past performance is not indicative of future results. Always conduct your own due diligence and consult with qualified financial professionals before making any investment decisions.