Blue-chip companies are no longer a bastion of reliable dividend income in tough times. At this writing, seven members of the Standard & Poor's 500 have cut their payouts this year, translating into a $12 billion annual shortfall for investors. The only nonfinancial among them so far is Pfizer (PFE), the world's largest pharmaceutical manufacturer, which last Monday slashed its dividend 50%. Pfizer is preparing to acquire Wyeth (WYE) for $68 billion, to be financed with $22.5 billion of new debt (from at least five banks) and equal parts of cash and stock. The acquisition will cushion the hit to Pfizer's revenue in 2011, when it loses patent protection on its well-known cholesterol-lowering medication Lipitor. Pfizer will halve its common payout starting in the second quarter to 16 cents a share, saving it over $4 billion annually. This action follows the drug maker's decision in December to leave its 2008 dividend unchanged, ending its 42-year unbroken skein of payout enrichments. Pfizer still disbursed the third-highest amount in annual dividends in 2008 among S&P 500 companies, behind General Electric (GE) and AT&T (T). Its current 8.7% yield is the highest in the pharmaceutical industry, but its forthcoming cut will bring it more in line with peers'. Pfizer's dividends have been ongoing since 1901. According to Howard Silverblatt, S&P's senior index analyst, the combined Pfizer/Wyeth entity will drop to No. 7 in dividend payments when the merger closes, distributing $5.07 billion less in dividends yearly.

So much for pledges made during economic upheaval. Dow Chemical 's chief executive officer Andrew Liveris asserted in mid-December that he wouldn't break Dow's (DOW) streak of consistent and never-cut dividends stretching back to 1912. "Not Dow. Not on my watch." However, last Tuesday, after missing the closing deadline on its $15.3 billion acquisition of rival Rohm and Haas (ROH), Dow said it would consider slicing its $1.6-billion-a-year dividend. "These last three weeks, the world has changed. Today, you put that on the table as one of the options," declared Liveris. Dow sank last week to a 52-week low of 11 and change, giving it a 14% yield. R&H, by the way, is suing Dow, which wants to have until June 30 to determine if the deal is a go. And Dow is suing Kuwait's state-controlled oil company over the collapse of a plastics joint-venture agreement that would have helped Dow fund the R&H merger. At least the lawyers are happy.

Railroad titan Norfolk Southern added two cents to its dividend, boosting it to 34 cents a share. That was the third addition in 12 months. Yield: 3.54%. Including predecessor companies, Norfolk Southern has paid dividends continuously since 1901. Since inception of its stock-repurchase program in 2006, the company has bought back 64.7 million shares for $3.3 billion.

Praxair is the No. 1 producer of industrial gases in North and South America, and one of the largest worldwide. The company raised its disbursement to 40 cents a share from 37.5 cents, for a 2.58% yield. Payouts were initiated in 1992, and have risen every year. Praxair bought back $892 million worth of its stock in 2008.

A leading worldwide provider of business information, Dun & Bradstreet boosted its quarterly 13%, from 30 cents a share to 34 cents. Yield: 1.77%. Dividends were initiated in 2007 at 25 cents a share. Stock buybacks in 2008 totaled $382 million.

McGraw-Hill, parent of Standard & Poor's, increased its dividend for the 36th straight year, to 22.5 cents a share from 22 cents, for a 4% yield. Dividends have been paid since 1937, and McGraw-Hill is one of fewer than 30 companies in the S&P 500 to enhance payouts annually for the past 36 years. Its stock buybacks have been halted temporarily.