What effects if dividends are cut will happen To the multiple businesses GE holds? Would it only effect the states? Or overseas? Will the White and blue collar work force be effected? Rumor has it that more white collar workers are getting the shaft again in all businesses. Let me know what you here!! Thanks in advance and Pray for the best!
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In 2015 Jeff Immelt told the investment community the EPS would be $2.00/share by 2018. Yesterday, JP Morgan and others indicated 2017 EPS estimates had been cut to 1.25-1.3/share and a dividend cut is "increasingly likely". GE responded with "The dividend remains a top priority" which is a vague. If the dividend consume all free cash and more then the only way you keep it is to VERY quickly cut costs. That would allow you to keep the dividend though you would have to take on debt for a short time till your cash flow increases to support it. GE's dividend payout ratio is WAY over the standard SP500 level of around 30%.
Here are 2 articles from yesterday:
JP Morgan:https://www.cnbc.com/2017/10/11/jpmorgan-sees-ge-dividend-cut-as-increasingly-likely.html
Jim Cramer: https://www.cnbc.com/2017/10/11/cramer-on-owning-ge-stock-rarely-have-i-felt-this-stupid.html
So what is GE stock worth with some of those possibilities? If EPS in 2018 is $1.3 to $1.5 and the dividend is cut GE's PE ration will sink to 13 (my guess) and the stock sinks to 16-19 range. For those nearing retirement (voluntary or otherwise) who have held onto GE stock in their 401K's it is very bad news.
Dividend cuts don't result in layoffs in any specfic location, groups or union/non-union employees. Dividend decreases result in greater EPS. So it's somewhat of a tradeoff. Lower dividends decrease stock price but raise EPS. Remember GE did a large buyback to help EPS last year but still cutting EPS estimates. GE is going to make more layoffs (its in there DNA). Layoffs will be in areas that don't generate revenue or where margins are low. We will know soon what those chosen areas are so best of luck to us all.
It's right that white collars should be hit because there's too many people pushing emails and piles of meaningless data around and not adding value to anything. We need to weed out the wastage and concentrate on what we sell.