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General Electric

(GE) - Get Report

made clear Friday that it has no plans to cut its dividend, but some argue it is only a matter of time before it must act.

Sterne Agee analyst Nick Heymann wrote in an email that the earnings


reported Friday in several of its business are unsustainable, and he says loss reserves are significantly lower than they were in 2002 and 2003, as the company faced a much weaker economy.

Heymann believes operating earnings in GE's industrial business will be only $8.5 billion to $9.5 billion, not enough to cover the $13.5 billion dividend. He says GE has had to issue debt in recent years to pay the dividend, but that this is unsustainable over time. Further, he argues that GE likely will need to increasingly lean on the government for financial support, making the dividend politically unfeasible as legislators have expressed anger about how companies are using government cash.

GE most likely would have to cut its dividend "no later than the second quarter of 2009," Heymann wrote. He set a price target of $12 "with $8 to $10 if and when

the dividend

is most likely cut."

While GE has not taken any equity from the government and insists it won't do so, it already relies on the government to guarantee its short-term debt, and for other types of support.

Nonetheless, GE Chairman and CEO Jeff Immelt was clear the company believes the dividend is sacred on Friday's conference call to discuss fourth quarter earnings.

"We believe the dividend represents a good shareholder return in this environment and we continue to run the company to be triple-A," Immelt said.

Immelt added shortly afterward that the plan for 2009 included "grow the company organically, maintain the dividend."

GE's annual dividend of $1.24 cents per share has been a

big part of its appeal

to its broad base of retail investors. The company says 40% of its shareholders are retail investors.

Tim Ghriskey, CIO at New York-based Solaris Capital Management, believes GE will be reluctant to alienate this investor base.

"GE is one of those blue chips, widely owned by trusts and by retirees who rely on income, so I wouldn't be surprised if they're under some type of greater pressure from above to maintain that dividend," he says.

GE shares closed down 10.8% to $12.03 on Friday, after earlier hitting a 52-week low of $11.87.