GE may cut dividend, why you should care

*Updated original story with 3Q results 10-20-17.

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General Electric (NYSE:GE), often referred to as a stock for widows and orphans because of the steady and generous dividend, is coming full circle and not in a positive way. The company reported a 9% drop in third-quarter profits, the first miss in over two years.

“We are deeply disappointed with today’s results” said CEO John Flannery, noting that while the dividend is a “priority,” its future is part of a company-wide review. GE will release the outcome of that review on November 13.

Wall Street analysts are pounding the drum warning that its dividend, yielding 4.15%, may get slashed as Flannery, who took over in August, looks to cut costs. Because GE is the third-largest owned stock among institutional investors, according to our partners at the WSJ Market Data Group, that could impact many Americans either through their 401(k) or plain vanilla index funds.

“GE is not what GE was,” Howard Silverblatt, senior index analyst, S&P Dow Jones Indices, tells FOX Business while pointing out that investors own the Dow member “not for the company but for the dividend income.”

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JPMorgan (NYSE:JPM) analyst Stephen Tusa and Goldman Sachs' (NYSE:GS) Joe Ritchie are among those warning clients that a dividend cut may be in the cards. "We see no quick fix to GE's problems as years of financial engineering, complex reporting and mis-aligned incentives are coming to bear," Ritchie wrote in a research note this week. The last time GE cuts its dividend was 2009, banks including JPMorgan and Bank of America (NYSE:BAC), followed suit in efforts to conserve cash amid the financial crisis.

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