Polliesdividend

General Electric (GE) slashes its dividend

Last week the new CEO of GE came with a new turnaround plan for this 125-year-old conglomerate.

In this plan GE slashes its quarterly dividend by 50% to 12 cents a share. (ouch)

John Flannery – GE CEO: “We are focused on driving total shareholder return and believe this is the right decision to align our dividend payout to cash flow generation … With this action and others that we will be discussing this morning, we are acting with urgency to make GE simpler and stronger to drive growth and create more value for our shareowners.”

 

Polliesdividend.com

The shares are down for more than 35 percent for this year. The new dividend policy effectively reduces GE dividend yield from 5.2% to an estimated 2.7%. GE has paid a dividend since 1899 and has only cut it twice: in 1939 and in 2009. This new dividend cut, their third in more than a centery, hurts.

Okay the dividend cut was not a surprise. More and more articles and blogs were writing about a possible dividend cut since a couple of weeks. Because GE takes just 1% of my Vrijheid Fonds, I decided not to act before the new financial numbers.

 

Vrijheid Fonds

My Vrijheid Fonds consist of 60 shares of GE. This dividend cut will be first felled in January 2018. My total dividend loss for 2018, due to the GE dividend slash, is approx. €30.

In the next few months I will do a new evaluation of GE for my Vrijheid Fonds.

Do you own GE? What is your action after the dividend slash?
I like to hear from you.

Cheers,

Pollie

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6 thoughts on “General Electric (GE) slashes its dividend

  1. Team CF

    This is exactly why you own multiple companies, markets change, companies evolve and dividend cuts cannot be excluded for any company. You might have time to see them coming and reinvest money elsewhere, but might need to take a hit on selling if the stock price is also down. Tough situations and difficult to answer what’s best.
    Applaud your decision to keep the shares (albeit I don’t know if it is the right decision), long term vision is required here.

    1. Pollie Post author

      Hello Team CF, I agree that is way diversification is important. With what I read so far, GE could be a great company again. They are focusing, and in my humble opinion this is a good thing. I’m considering to average down. But before I pull the trigger, I will do some more research

      Cheers,

      Pollie

  2. KeithX

    Hi Pollie. I do own shares of GE and am still reinvesting the dividends. I think that Jeff Immelt being replaced by John Flannery is the best thing that has happened for the company in 10 years. Just my opinion, but it seems doubtful that Mr. Flannery and his team can do any worse than the ones they are replacing.

    I sold 200 shares of GE after the earnings announcement, and bought back 250 after the dividend was cut. I actually spent less to acquire the 250 shares that I received for the 200. This was only a portion of my total investment, though. My guess is that GE will recover nicely over the next 5 years, in a similar fashion to the turn around at Honeywell after their CEO was replaced a few years back. Will there be more short term pain? Probably, but I think the downside is around 15. The stock could easily double from here if the new management shows that they are executing on their plans.
    Be blessed!
    Keith

    1. Pollie Post author

      Hello Keith,
      Great action. And I agree that the downside is around $15.

      What I read so fare about John Flannery is giving me a better feeling than the former CEO.

      At this moment I’m considering averaging down my stocks, but first I will do some more research

      Cheers,

      Pollie

  3. dividendgeek

    I believe its a good thing. No way GE could have afforded to pay such high dividends. I am fairly confident they will reinvent themselves … their IoT has been picking up well. I will probably hold on to my stocks and try to average down with DRIPs

    1. Pollie Post author

      I agree, the high dividends couldn’t go on. So a cut was and is the most logical thing to do by the new management.
      As i wrote on the other comments, I consider averaging down my position in GE. But first some more research

      Cheers,

      Pollie

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