General Electric stock is down 30% over the past year, leaving shareholders little solace beyond their hefty dividend payments. But those could be cut in half within the next two weeks, according to JPMorgan analyst Stephen Tusa, who ranked No. 1 in a recent survey by Institutional Investor for coverage in the electrical equipment and multi-industry category.
Tusa went bearish on General Electric stock (ticker: GE) in May 2016. The share price has slid from $30 to $20 since then. That puts the dividend yield at 4.8%. But Tusa predicts GE will cut payments to 45-to-50 cents a share per year, from 96 cents now. And he tells Barron’s that Chief Executive Officer John Flannery, who took over at GE in August, will likely want to make the cut before the company’s fast-approaching Investor Day meeting.
“Timing is always tough to call on these things,” says Tusa. “But if I were the new CEO...I would not want to step on that stage on Nov. 13 and have the focus be entirely on something like this that is so binary. Better to get it out before the meeting so you can talk about other things that need more color, like long-term strategy.”
By Tusa’s math, GE is generating less than $2 billion in yearly cash to fund $8.4 billion in dividend payments. It has been effectively borrowing to pay its dividend since it began transforming its business in 2012. Without a cut it will have to continue to do that, says Tusa....MORE (and more JPM on GE to come at Barron's this weekend)
Wednesday, November 1, 2017
"JPM: GE Could Cut Dividend Within Two Weeks"