Companies that are failing today were paying dividends a just few months ago. What gives?

Both dividends and share buybacks are now in decline. Among the S&P 500, buybacks peaked when the market peaked in the third quarter of 2007, and dividends peaked in the fourth quarter of 2007. On October 3, S&P reported that some 138 publicly held companies slashed their dividends in the third quarter, saving $22.5 billion. Buybacks are drying up, too. The pace in the second quarter of 2008 ($88 billion) was the lowest since the fall of 2005, down by half from the third quarter of 2007.