Cuts or suspensions in dividends can certainly happen, but that depends to an extent on the size/stability of the company and economic conditions. The facts show that dividend cuts occur at a rate of less than 2% with stable companies in a typical year. Of course, economic stress can increase the likelihood of a cut, but over time its a relatively small number.
That said, the big problem with cuts is that they can negatively affect the stock price in a big way so you run the risk of losing money in the value of the stock.
It advisable to keep an eye on a company’s pay out ratio, its free cash flow, and other measures of financial health.
Of course they can, and do. And the author neglected to mention that fact. It doesn't speak favorably of him.
the big problem with cuts is that they can negatively affect the stock price in a big way
DUH! OF COURSE they do ... the dividends are a big part of the stock's value in the first place.
It advisable to keep an eye on a company’s pay out ratio,
Duh! Of course it is. The author sort of glosses over this. Investing isn't a hands-off strategy. Never was, never will be.