General Electric Company (NYSE:GE) has authorized its regular quarterly dividend of $0.31 per share of the Company’s common stock. This will keep the dividend the same, but…. if you read into the Jeff Immelt comments with some loose interpretations, the suggestion here is that the company will finally at least consider backing off of that dividend. We think the line just got drawn in the sand. Finally.
We are offering some comments here, and giving our own color as to why this means that Immelt has finally blinked and will cut the rate of that dividend after this next quarter’s dividend announced here today.
Jeff Immelt said, “The Board and I believe that it is in the best interests of the Company’s shareowners to continue to pay an attractive dividend. The Board and I will continue to evaluate the Company’s dividend level for the second half of 2009 in light of the growing uncertainty in the economy, including U.S. government actions, rising unemployment and the recent announcements by the rating agencies. Our fundamental priorities will remain keeping the Company safe and secure in the current environment and investing in attractive growth opportunities.”
So here is the promise… the same for now, and an “attractive” dividend ahead as being in the best interest does not mean it will be kept at the same level. It just means it will be attractive, and that could be defined as any rate…
Evaluating that dividend for the second half of 2009 in light of…. this is the out to drop it. Again, finally. He even notes what the ratings agencies have said.
Fundamental priorities remain in keeping the company safe and secure….. that means the balance sheet, not a shareholder dividend check.
… investing in attractive growth opportunities…. well, it sounds nuts today, but there are untold billions in assets that will come up for grabs if banks get nationalized, if a bad bank comes up, or in other distressed arenas. We doubt GE would make any size acquisition for the foreseeable future. But a few months out could be a different story if their overhead is lower.
The dividend is payable April 27, 2009, to shareowners of record at the close of business on February 23, 2009. The ex-dividend date is February 19, 2009. This dividend payment will complete the dividend for the first half of 2009.
So again, Immelt is keeping the dividend the same for today. But he finally gave himself an out for after the Q2 period.
Take our word on this… unless there is a sudden massive economic improvement, then this dividend gets cut significantly after April.
GE stock is still unresponsive as shares are barely up 1.5% at $11.02.
Jon C. Ogg
February 6, 2009