Many Wall Street pundits have called General Electric Company’s (NYSE:GE) dividend into question in recent months, but until now, Jim Cramer hasn’t been one of them.
But following a bearish note from JPMorgan this week, and a relatively weak response from GE management, Cramer is changing his tune.
“A dividend cut or ‘adjustment’ as it is likely termed, as increasingly likely,” said JPMorgan analysts in a note to clients recently. When CNBC pressed GE for a response to that comment, the company simply said “The dividend remains a top priority.”
Cramer said that remark simply isn’t good enough, telling CNBC that the response should have been a lot stronger:
“It would say, ‘The board has listened to what people are saying, and the board has tremendous confidence, and the dividend will be kept intact at these prices,'” the host of CNBC’s “Mad Money” said.
The current quarterly dividend on GE stock is 24 cents per share, which puts the yield around 4.2 percent based on early Wednesday trading at around $23 per share. Yield percentages fluctuate with movements in stock price.
“I don’t know what to do,” Cramer said. “Rarely have I felt this stupid.”
Still, Cramer pledged his support for new CEO John Flannery, who has a long, hard road ahead of him to bring the company back to its former glory.
Cash flow issues are the main problem Flannery faces in the near term. GE will survive its issues, but it may have to do so by slashing its dividend payout dramatically.
General Electric Company shares fell $0.02 (-0.09%) in premarket trading Thursday. Year-to-date, GE has declined -25.05%, versus a 15.71% rise in the benchmark S&P 500 index during the same period.
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