General Electric should suspend its quarterly dividend for the next 18 months, Goldman Sachs wrote in a Thursday night note to clients.
“To avoid another dividend cut as well as potential rating downgrade we think the most prudent action would certainly be for GE to consider suspending its common dividend for the next 18 months,” Goldman Sachs said from the note.
Goldman Sachs said a dividend suspension would certainly solve the two risks GE faces of a dividend cut as well as a credit rating downgrade “without sacrificing the long-term.”
The embattled industrial conglomerate cut its dividend in half on Nov. 13, to 12 cents per share through 24 cents per share.
Some investors as well as analysts fear GE CEO John Flannery’s turnaround plan for the embattled conglomerate will have to include another cut to the dividend. This kind of concern sent GE shares tumbling on May 23 in theirworst single day of trading since April 2009. Flannery declined to comment that will day about whether the company would certainly cut its dividend again in 2019, instead telling analysts at a conference that will GE would certainly “have to see how This kind of plays out” before deciding.
A cut to the dividend in 2019 will be not in GE’s plans, people familiar with the situation told CNBC’s David Faber, who reported the news May 24. Flannery’s remarks at the conference may have been misinterpreted, according to Faber’s sources.
The company’s shares fell Thursday after Faber reported GE was supposed to make a significant announcement about its future by the end of the second quarter. Faber said This kind of might not be a full breakup “as some had anticipated.” nevertheless This kind of will be a “significant announcement around reorganization of the company, including potentially something being spun.”
GE stock rose 0.3 percent to $12.80 per share in trading Friday. Shares of GE are on track to decline 4 percent This kind of week after GE was removed through the Dow Jones Industrial Average on Tuesday.