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 and potential rating downgrade we think the most prudent action would be for GE to consider suspending its common dividend for the next 18 months,” Goldman Sachs said in the note.
Goldman Sachs said a dividend suspension would solve the two risks GE faces of a dividend cut and a credit rating downgrade, “without sacrificing the long-term.”
GE stock was largely unchanged at $12.77 per share in premarket trading Friday.
The embattled industrial conglomerate cut its dividend in half on Nov. 13, to 12 cents per share from 24 cents per share.
Some investors and analysts fear GE CEO John Flannery’s turnaround plan of the embattled conglomerate will have to include another cut to the dividend. This concern sent GE shares tumbling on May 23, in its worst single day of trading since April 2009. Flannery declined to comment that day about whether the company would cut the company’s dividend again in 2019, instead telling analysts at a conference that GE would “have to see how this plays out” before deciding.
A cut to the dividend in 2019 is not in GE’s plans, people familiar with the situation told CNBC’s David Faber, who reported the news May 24. Flannery’s remarks to at the conference may have been misinterpreted, according to Faber’s sources.
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Source: Investment Cnbc
Goldman Sachs: GE should suspend dividend for the next 18 months