General Electric: The Other Shoe Should Drop Soon

Jun. 25, 2018 10:38 AM ETGeneral Electric Company (GE)106 Comments
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WG Investment Research


  • This company was recently booted from the Dow, so what should investors expect to happen next?
  • Analysts are calling for General Electric to suspend its dividend and I actually agree with these calls.
  • I have an overweight position in General Electric and I plan to stay long the stock.

What a month! So far, June 2018 has not been kind to General Electric (NYSE:GE) or its shareholders, as the stock is currently sitting around $13 per share and is down almost 15% over the last month.

ChartGE data by


To add injury to insult, GE was also recently booted from the Dow Jones Industrial Average after being apart of the index for over 100 years. How could things possibly get any worst? One thing comes to mind when I think about this question - another dividend cut. I fully expect for General Electric to slash its dividend again but, as a long-term investor, I believe that a dividend reduction would eventually be a positive catalyst for the stock.

Would A Dividend Cut Actually Be A Positive For GE And Its Shareholders?

Goldman published an investor note that called for GE to "suspend" (try not to laugh about the use of "suspend" instead of "cut") its dividend for 18 months. It pains me to think about one of my long-term investments cutting its dividend, especially after it just recently reduced the payout by 50%, but I believe that a more sustainable dividend would eventually be cheered by the market.

At the end of the day, Mr. Flannery really needs to consider if it still makes sense for GE to be paying an above-average dividend while the company is in the midst of major restructuring efforts while also contending with a stretched balance sheet and a credit rating is close to junk status.

Company Dividend Yield
GE 3.76%
HON 2.07%
UTX 2.24%
MMM 2.77%
Average 2.71%

Source: Yahoo! Finance

Ask yourself, why does an industrial conglomerate that has cash flow pressures have a dividend yield that is twice its closest peer? The table speaks for itself, of course, in my

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This article was written by

WG Investment Research profile picture
Our President and CIO is a CPA with experience in public accounting and the financial services industry. He earned his Master of Accountancy degree in 2008 and his B.S. in Business Management in 2007. He is also a Level III CFA candidate. He has been intrigued by the market from the start. Over the years, he has learned that long-term investing is a discipline that, if followed, will help contribute to building lasting wealth. As such, most of our articles will be about the investments that we plan to hold for at least 3 to 5 years, as long as the company's story does not change. As a Seeking Alpha contributor, our main goal is to write about the companies that are key to our portfolio with the hope of promoting discussion (for or against the investment) from others within the SA community.Please visit our website for more information about W.G. Investment Research LLC.

Disclosure: I am/we are long GE, BHGE, HON, UTX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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