On Monday, General Electric (NYSE:$GE) announced that it is slashing its dividend in half. Many speculate this will cause long-time shareholders of the Boston-based company to run and hide, while others believe it will free up much-needed capital.
General Electric disclosed that the quarterly payout is being slashed to 12 cents a share. As a point of reference, before today, the payout was 24 cents a share.
For the year, General Electric shares are down more than 35%. On Monday, shares increased 0.3% in pre-market trade and gained more than 2% before the market opened.
Here’s what CEO John Flannery had to say about the cut:
“We understand the importance of this decision to our shareowners and we have not made it lightly. We are focused on driving total shareholder return and believe this is the right decision to align our dividend payout to cash flow generation.”
It seems not everyone is a fan of Flannery, as he took quite a bit of heat at the investor day presentation. One attendee told the CEO that an early announcement that the dividend was safe “hurt your credibility right out of the gate.”
His response? “Fundamentally, that dividend was predicated on us growing to a certain level that we just did not see happening in terms of industrial cash flow.”
Featured Image: twitter
