How Safe Is General Electric Company's New Dividend?
General Electric Company's (NYSE: GE) previous annual dividend of $0.96 per share has been reduced to $0.48, but is even this payout sustainable? The reason for the cut was that earnings and cash flow fell well short of expectations in 2017 and management needs to improve performance going forward. That said, let's take a look at the plans CEO John Flannery recently outlined at the investor update, and whether they make GE's new dividend truly sustainable or not.
At the heart of the matter lies the question of GE's industrial free cash flow (FCF), or the cash a company has left from its income to spend on making acquisitions, buying back shares, paying off debt, or paying a dividend. If a company is forced to use all its operating income to provide cash for working capital (running the business) and/or to make capital expenditures, then it won't have any FCF left -- not good for investors hoping for a dividend.
Source: Fool.com
General Electric Co. Stock
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As a result the target price of 162 € shows a slightly positive potential of 7.64% compared to the current price of 150.5 € for General Electric Co..
