There s a disturbing trend that s steadily growing on Wall Street and this time it has nothing to do with fancy derivative products or golden parachute plans for CEOs. Dividend-paying stalwarts, long considered a refuge for investors during bear markets, have been cutting their payouts at an alarming rate.

most notably General Electric (GE) ), while at least six more, like Motorola (MOT), have suspended them altogether. In 2008 firms in the S&P 500 cut their dividends by a record $40.6 billion in aggregate, or $4.70 per share. This year is already worse: As of late March the total had already hit $41.9 billion, says Howard Silverblatt, senior index analyst at Standard & Poor s.

Up until the recent market crash, dividends were sacrosanct. News that a company whacked its dividend would almost certainly send its stock price south. But these days, companies are trying to preserve cash, and that s definitely acceptable today, Silverblatt says. That s a rapid shift in both corporate culture and investor behavior. Indeed, JPMorgan Chase (JPM) stock actually rose on the company s February announcement that it would cut its dividend by 87%. The move by JPMorgan widely considered one of the strongest commercial banks provided cover to other banks, including PNC Financial Services Group (PNC), U.S. Bancorp (USB) and Wells Fargo (WFC), that followed suit with their own steep dividend cuts, experts say.

Dividends are a function of a company s earnings and free cash flow in other words, how much profit a firm is making and the amount of cash it s able to generate after spending what it needs to maintain the business. Sometimes the explanation as to why a firm is reducing the amount of profits it shares with investors has merit, says Mark Freeman, comanager of the WHG Income Opportunity Fund (WHGIX) . In JPMorgan s case, CEO Jamie Dimon claimed the dividend cuts would help the bank maintain its strong balance sheet. But that s not always the case. Investors saw GE s 68% cut as a sign of weakness, coming after a big 2008 earnings drop and repeated assurances by CEO Jeffrey Immelt that the company would not resort to a dividend cut. (GE was one of our picks in January s Where to Invest. )

The argument for dividend investing remains the same dividends accounted for 40% of the S&P 500 s returns from 1926 through 2008. It s just a trickier process to find the strongest dividend payers. It s not impossible, though. Even in the midst of what S&P says will be the worst year for dividend cuts since 1938, 47 companies, including Wal-Mart (WMT), have actually raised their dividends. What s clear, Freeman says, is that the days of buying a stock because of the dividend and holding it indefinitely are over.