I wrote about the issues facing GE in my Forbes column yesterday, and my only interest in
GE as a potential investment is based on my asset management firm's
income-based investing approach. GE's 2017 share price crash has brought
the common shares to a current yield of 4.2% based on the company's quarterly
payout of $0.24, which was increased by a penny beginning with the January 2017
payout.
No management wants to cut a common dividend payout rate,
and lowering the rate so recently after it was increased generally makes
management look either feckless or myopic. Neither is a quality valued by
institutional investors. GE's CEO John Flannery took over on June 12th, and I
am sure that cutting the dividend was not among his first priorities. That
said, Mr. Flannery is a "finance guy"--it's hard to find anyone in
GE's upper management who is not--and GE's payout is simply too high given an
cash outflow in its core industrial business in the first half.
Can GE keep paying a $0.24 quarterly dividend?
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