With all the headlines with respect to General Electric (GE) yesterday, some may have missed some key details regarding the dividend. While announcing a cut to the conglomerate's full-year profit forecast as well as a halt to the share buyback, GE also explained that its board voted to maintain GE's 31 cent quarterly dividend through until the end of 2009. This means that 2009 will be the first year since the 1970's that GE will not raise its dividend.
Jeff Immelt, GE's CEO, said:
Given the recent dramatic developments in the financial markets, we have made some tough decisions to further reduce risk and strengthen our balance sheet while maintaining our dividend.
Although all of these decisions by GE to preserve capital seem to have been viewed positively by the market and the rating agencies, I can't help but think that today is a sad day for dividend investors everywhere. One of the largest, most diverse, and most stable dividend growing firms in the world has decided to not raise its dividend for the first time in decades. It will be interesting to see how many companies decide to go this route when faced with the tough financial decisions that the credit crisis has brought.