Recommend reading this paper on unsustainable dividendsAny investor or anyone considering investing in VET should read the paper linked below. I’ve also copied the abstract for the paper.
Abstract: Prior studies examine market reactions to dividend changes and earnings changes in separate contexts. In this paper, we compare the dividend paid by a firm to its respective earnings and the implications of such relationship. When a firm distributes more than its earnings as dividends, the dividend payout is unsustainable in the long run. We document unfavorable market reactions to such dividend payment announcements by these firms as compared to firms that distribute less than all of their earnings to shareholders. These firms also register significantly lower long-run buy-and-hold abnormal stock returns, implying initial underreaction and a subsequent drift. Further analyses show that firms with dividends greater than earnings experience subsequent deteriorating earnings; this partly explains their documented subpar long-run stock price performance. These firms also increase their leverage and cut down on subsequent dividends and capital expenditures more aggressively than sustainable dividend paying firms.
https://www.fmaconferences.org/Boston/UnsustainableDividends.pdf