GE's Dividend Cut Yields $9 Billion Savings (GE)

General Electric Co. (NYSE: GE) is finally cutting its dividend.  We predicted this, and it has finally come to pass.  We said that a cut in half could save $5 billion per year, but the cut is much larger and will save approximately $9 billion per year/

Starting in the third quarter, General Electric’s current $0.31 per quarter dividend will fall $0.10 per quarter.  With 10.5 billion shares outstanding, each penny cut or raised here makes a huge difference in today’s climate.

A report has come out of CNBC and on Dow Jones confirming the dividend cut news, and our calls and emails into the company have not yet been returned.

You can bet that the naysayers will come out of the woodwork calling management a traitor.  The degree to which the dividend was cut is more than what we had modeled in.  But this is a good thing for the current climate where companies have to go into survival mode rather than try to keep paying out shareholders. Nine billion dollars is a hell of a savings, even if it is much more than what we expected.

Jon C. Ogg
February 27, 2009