Why You Shouldn't Panic if You Rely on GE's Dividend

People, especially retirees, counting on GE's quarterly dividend for income shouldn't panic. But they should rethink their reason for owning GE. Here are some alternatives.

Author:: Edward Hardy
Publish date:: Nov 15, 2017 7:17 AM EST

Shareholders of General Electric Co. (GE) - Get Report , especially those who are retired and are (or were) relying on the stock's 24-cent quarterly dividend to fund their living expenses, should not panic -- even though the stock is down 13% over the past two days.

On Tuesday, John Flannery, the CEO of GE, announced plans to restructure the company and focus on healthcare, aviation and energy, and halve its quarterly dividend to 12 cents a share

"Investors liked GE because it was a stable company with a consistent rising dividend," said Peter Snow, director of investment research with NFP Corporate Benefits. "GE no longer has that profile."

However, GE has now become a turnaround story and Flannery has his work cut out for him with an aggressive agenda, Snow said. "If income investors want to stay in this position, they may need to be patient before they see favorable results, particularly regarding a dividend increase," he said.

Patience may also mean not bailing on GE just because the stock has declined dramatically in value this week. "I hate seeing investors sell a position after it has lost substantial value, as GE has," said Snow. "The best time to buy a stock -- and the worst time to sell -- is after the price has pulled back."

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