SFL Corp (NYSE: SFL) saw its stock price plummet 13.75% in Tuesday's trading session, despite reporting better-than-expected second-quarter 2025 financial results. The sharp decline was primarily triggered by the company's decision to cut its quarterly dividend, overshadowing the positive earnings report.

SFL reported quarterly earnings of $0.01 per share, surpassing analyst expectations of a $0.01 loss. The company's revenue for the quarter came in at $192.588 million, exceeding the projected $186.200 million. However, investors reacted negatively to the announcement of a reduced quarterly dividend of $0.20 per share, down from $0.27 in the previous quarter.

The dividend cut appears to be a result of SFL's recent strategic moves and market challenges. The company has been actively renewing its fleet by selling older vessels, which has increased available capital for new investments but reduced near-term cash flow. Additionally, SFL faces headwinds in its drilling rig business, particularly with its legacy rig Hercules, due to market uncertainty and oil price volatility. CEO Ole B. Hjertaker acknowledged these challenges, stating, "The recent market uncertainty and oil price volatility [have delayed] new employment opportunities for the rig. This is impacting our near-term financial results as we keep the rig warm stacked." These factors have likely contributed to the decision to lower the dividend, causing concern among income-focused investors and leading to the significant stock price decline.