Chasing Value: GE slashes dividend 68%

Posted Feb 27th 2009 5:50PM by Sheldon Liber
Filed under: Bad News, Management, Competitive Strategy, General Electric (GE), Chasing Value™, Recession, Financial Crisis

Most market watchers will not be surprised to learn that General Electric Company (NYSE: GE) will be slashing its dividend by 68% from 31 cents per share to 10 cents. GE decided to increase it's flexibility in these difficult times and although there have been indications that it could lose it's AAA financial rating, this could prevent or at least might forestall that possibility.

General Electric was included in my picks for the year and has not been holding up well because of its financial division, its largest entity, and the doubt cast by anything with leverage.

The dividend yield on a trailing basis at today's closing price of $8.51 per share was 10.84%. The cut brings it down to about 3.4% which is much closer to GE's long term yield. This should remain attractive to many investors and will leave long term shareholders with some income.

It was only a few days ago I posted Chasing Value: Will we be eating out of trash cans?, and given today's news, there are probably a few more people around now that believe we might.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of GE and have open options as well.

Tags: Chasing Value, ChasingValue, dividend investing, dividend stocks, DividendInvesting, DividendStocks, GE, general electric, GeneralElectric, recession, sheldon liber, SheldonLiber, yield