Dow(US:DOW) The Motley Fool·2025-08-01 11:15Core Viewpoint - Dow's recent dividend cut and disappointing earnings highlight the challenges the company faces, but the cut may ultimately benefit long-term investors by improving financial stability and operational flexibility [1][2][14] Financial Performance - Dow's earnings per share (EPS) and free cash flow (FCF) saw significant increases in 2021 and 2022 due to recovering demand post-pandemic and a supply-demand imbalance in the commodity chemical industry [4] - However, both EPS and FCF have been declining for years, with recent reports indicating that they have turned negative [6] - The dividend cut will save Dow approximately $990 million annually, which is significant compared to its operating expenses of $2.55 billion over the past 12 months [7] Cost Management - Dow has been actively reducing its operating expenses by shutting down plants and identifying inefficiencies, with a goal of achieving $1 billion in potential cost savings [8] Market Context - The situation mirrors that of 3M, which faced similar challenges and ultimately cut its dividend, leading to improved stock performance and operational results [10][12] - Dow's current dividend yield stands at 5.5%, making it attractive despite the recent cut, as the stock price has been significantly depressed [13] Investment Perspective - The negative sentiment surrounding Dow may present a buying opportunity, as even modest improvements in performance could be positively received by the market [14]