Alcoa joins a growing list of firms cutting dividends

Alcoa (AA) has cut its dividend. No one should really be surprised.The firm's shares have dropped from a 52-week high of $44.77 to under $6. But, the market was taken aback and Alcoa has traded down 10 percent after hours.

What probably happened was that Alcoa looked at its balance sheet and its business prospects and said to itself that in a world without easy credit, it needed a larger buffer against a worsening economy. It will get a bigger buffer by reducing its payout from $0.17 to $0.03. The dividend cut will save $400 million, but the firm went much further to save cash.