It’s a huge week for Australian shares this week.

Australia and New Zealand Banking Group (ASX: ANZ) has just this morning announced it will cut its dividend, while the Reserve Bank of Australia will also meet today.

Will they cut interest rates, or won’t they?

The cash rate has been stuck at 2 percent since May 2015, which is well above the cash rates set by most other developed countries.

It’s a well-known fact that cutting rates further is something the board does not want to do…

After all, it doesn’t want to create a housing bubble, while it also recognises the need to have more flexibility in case economic conditions do worsen from here…

Time to Move

Unlike the U.S. Fed Reserve or the Bank of Japan, the RBA does still have room to move.

Last week’s inflation numbers were well below the RBA’s target range of 2 percent to 3 percent, leaving the door wide open for further easing in monetary policy.

The board will announce their decision at 2:30pm today, Sydney time, where we could be looking at a cash rate of just 1.75 percent.

As is typically the case, economists are divided on the issue…

According to The Sydney Morning Herald last week, 10 of the 24 surveyed by Bloomberg are predicting a cut. That compares to just three from two weeks prior.

Market participants are even more convinced the RBA will make a move.

As of yesterday, the ASX’s RBA Rate Indicator was showing a 53 percent chance of a rate cut this afternoon.

In other words, the RBA’s decision could go either way today…

Whatever happens, however, it appears interest rates are staying lower for longer…

And that makes a very convincing case for a greater investment in high-yield dividend-paying shares, including some of those on the Motley Fool Dividend Investor scorecard.

Speaking of solid dividends, you’d think the banks’ shares would be soaring on renewed expectations of an official interest rate cut, but not so…

Instead, shares of all four banks were thrashed on Monday. It’s possible they’ll get hammered again today, courtesy of ANZ Bank.

More on ANZ in a moment…

But first, Westpac Banking Corp (ASX: WBC) reported its half-year earnings yesterday, revealing a 2 percent decline in cash earnings per share.

It’s return on equity – a key measure of profitability – was also down 1.66 percent to 14.2 percent, while it left its dividend unchanged compared to the prior period…

Commonwealth Bank of Australia (ASX: CBA) did the same when it reported its interim results in February, electing to leave its dividend unchanged from the prior corresponding period.

Investors responded to Westpac’s results by selling its shares down 3.5% on Monday…

But that could be nothing compared to how they treat ANZ Bank’s results from today.

ANZ’s cash profit plunged 24% to $2.78 billion, impacted by a $717 million charge it said would put the bank in a stronger position in the future.

It gets worse…

Unlike Westpac and Commonwealth Bank, which both left their dividends unchanged, ANZ went one step further and cut its dividend by 7% compared to the prior period.

This is from ANZ this morning:

“The Interim Dividend of 80 cents per share fully franked is down 7% reflecting a move to gradually consolidate ANZ’s dividend payout ratio within its historic range of 60-65% of annual cash profit which provides a conservative, sustainable and fully franked dividend base for the future.”

It continued: “The Final Dividend for FY16 is expected to be at least the same as the Interim Dividend in cents per share.”

Let’s assume for a moment that ANZ did cut its final dividend to be the exact same as its interim dividend of 80 cents….

ANZ paid a final dividend of 95 cents per share in FY15, suggesting a cut of up to 15.8% is possible…

Of the banks, many analysts considered ANZ to be one of the ones most at risk of cutting its dividend, but most thought it would hold off until at least its full-year results announcement in September.

National Australia Bank Ltd. (ASX: NAB) is the other bank thought to be in danger of giving its dividend a haircut.

NAB won’t report its results until Thursday, leaving investors with a nervous wait.

This is certainly a reality check for investors.

Although each of the banks still offer compelling dividend yields, investors are quickly finding out they can no longer rely on the banks’ ability to grow their earnings and dividends on a consistent basis.

Their ability to do so over the years has been bolstered by booming house prices and greater household incomes…

More recently, record low interest rates and falling loan impairment charges (or bad debts) have also boosted results, thus allowing the banks to continue pleasing investors.

But many of those trends are now reversing course…

Whether that means that this is the turning point remains unclear, but there are certainly signs that indicate investors should steer clear.

A $1.5 billion windfall

When all four of the banks fall as heavily as they did on Monday, the broader share market typically follows.

But that didn’t happen this time around…

Although it fell sharply to begin the day, the S&P/ASX 200 (ASX: XJO) recovered most of its losses as the session went on, ending the day just 0.2 percent lower.

Perhaps unsurprisingly, Telstra Corporation Ltd (ASX: TLS) was one of the market’s best…

For starters, Telstra is also considered to be one of the country’s best dividend-paying shares, and could be in higher demand ahead of the RBA’s rate decision later this afternoon.

But the market was also likely responding to an announcement made by Telstra before the market even opened…

While the banks are looking to decrease their payments to investors, Telstra wants to distribute an extra $1.5 billion to shareholders in the first-half of financial year 2017!

Funded by the proceeds from its recent Autohome sale, that distribution will come as an addition to Telstra’s already generous dividend, and could come in the form of a share buyback or a special dividend payment.

Personally, I think Telstra shares represent good value today for long-term investors, although there are a number of other dividend-paying shares I think are even better

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