General Electric (GE) Cuts Dividend *
After months of saying the dividend was safe, the Board of Directors of General Electric Company (GE) Friday authorized a plan to reduce the Company’s quarterly dividend to $0.10 from $0.31 per outstanding share of the Company’s common stock, effective for the second half of 2009. The company’s news release stated the decision would preserve approximately $9 billion for the Company on an annualized basis. GE Chairman and CEO Jeff Immelt said:
“We recognize the importance of the dividend to our shareholders and the significance of this decision, but we believe it is the right precautionary action at this time to further strengthen our Company for the long-term, while still providing an attractive dividend.”
As is my policy, I immediately sold my shares of GE.
Full Disclosure: No position in GE
How funny it is that we posted similar news on our blogs at approximately the same time!
Best Regards,
Dividend Growth Investor
PS I sold GE as well. The pool of available dividend investments is rapidly shrinking..
DGI: You are correct, the pool is shrinking fast. The upside is it is easier to identify the stronger companies.
Best Wishes,
D4L
Does the dramatic drop in price of GE with rampant speculation that the dividend cut was inevitable make you want to reconsider how you sell? Like would you re-evaluate selling when they do not increase the dividend? I am just sure you wish you would have sold when it was in 20′s instead of $9. Or do you just want to remove any emotion out of the equation?
Chris: You bring up a good point. I have been looking at if I would I be better off selling when a dividend goes flat? For GE and PFE (and others) I would have been. There are some other flat-liners that I am holding and watching. So far, my experience would push me in that direction.
Best Wishes,
D4L
I was just curious, do you ever consider capital gain/loss scenarios when you decide to sell? (I could imagine a situation where if you held onto some stock longer it could switch from short to long term, for example).
Janet: I do consider the value aspect of a stock before selling and would switch it to my capital appreciation portfolio if I considered it a keeper.
Best Wishes,
D4L