The stock closed down $1.09 or about seven per cent at $13.73 on the Toronto Stock Exchange as more than 7.5 million shares swapped hands, making it the most actively traded company for the day.
The power producer said it would now pay a quarterly dividend of 28 cents per share, down from its earlier payment to shareholders of 29 cents per share.
TransAlta also announced the sale of its 50 per cent stake in CE Generation, Blackrock development and Wailuku to its partner MidAmerican Renewables for US$193.5 million.
TransAlta president and chief executive Dawn Farrell said the company's growth strategy is unchanged but its ability to execute the plan will be enhanced by the asset sale and dividend reduction.
"An attractive, sustainable dividend continues to be an important part of our approach to delivering value to shareholders. In addition, a strong investment grade balance sheet is critical for enhancing our ability to compete for growth opportunities," Farrell said.
TransAlta reported a fourth-quarter loss Thursday of C$66 million or 25 cents per share compared with a profit of $39 million or 15 cents per share in the last quarter of 2012.
Revenue for the three month period slipped to $587 million from $646 million in the year-earlier quarter.
The company said its comparable earnings before interest, taxes, depreciation and amortization including finance lease income and adjusted for certain other items fell to $242 million for the quarter compared with $312 million a year ago.
In its outlook for 2014, TransAlta said it expects comparable EBITDA to be in the range of $1.015 billion and $1.065 billion based on its outlook for power prices in Alberta and the Pacific Northwest.
Free cash flow is expected to be in the range of $293 million to $343 million, or $1.07 and $1.26 per share, based on sustaining capital expenditures of approximately $350 million.