GE is slashing its dividend from $.31 to $.10, a move that will save it $9 billion per year, reports CNBC (a GE unit). GE’s been getting hammered today, having traded as low as $8.50. This was seen as a strong possibility, particularly as its pristine AAA credit rating is at risk.
Up until recently GE has indicated its desire to maintain its dividend, but by saving this money it should ease pressure on its credit rating (maybe). JPMorgan recently made a similar move.
Often companies will increase dividends if they feel the market is being too negative on the stock, but in the case of these companies, where the biggest fear is liquidity or solvency, it makes sense to just hold the capital.