General Electric (GE) announced today that they will be cutting their dividend from 31 cents per share down to 10 cents per share which is a whopping 68% drop.
This is significant because GE is considered to be the proxy of the American economy as it covers a number of different industries and is the 10th largest company in the world. Cutting a dividend is not the worst thing in the world however since it indicates that management is in cost-cutting mode and willing to do whatever it takes to make the company profitable again. Companies that hang on to their high dividend too long for public relations reasons could very well end up suffering for it.
Of course, not all companies are cutting dividends – so don’t go and sell all your dividend stocks just yet!