Feb. 6 (Bloomberg) -- General Electric Co.’s board said it will evaluate whether to maintain the dividend in this year’s second half as a global recession and credit crisis hurt earnings at the world’s largest maker of jet engines and power equipment.
For now GE will continue to pay the quarterly dividend of 31 cents a share, the Fairfield, Connecticut-based company said in a statement today.
Chief Executive Officer Jeffrey Immelt said in January that he believes GE can justify both its $1.24-a-share annual dividend, which will cost the company about $13.4 billion this year, and maintain its AAA credit rating, the highest possible.
“The board and I will continue to evaluate the company’s dividend level for the second half of 2009 in light of the growing uncertainty in the economy, including U.S. government actions, rising unemployment and the recent announcements by the rating agencies,” Immelt said in the statement. “Our fundamental priorities will remain keeping the company safe and secure in the current environment and investing in attractive growth opportunities.”
The board voted to preserve the dividend in September, saying the payout was the best way to “return value to shareholders.” U.S. companies are reducing dividends at the fastest rate in half a century, hoarding cash and squeezing investors who depend on the payouts more than ever to boost returns.
The global recession and credit crisis may make it harder for GE Capital, the company’s finance arm, to meet its $5 billion profit goal this year. Moody’s Investors Service laid out in December specific criteria the company must meet to retain its highest rating, including the ability of the non-finance units to produce $16 billion in cash flow as Immelt had promised.
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