Analysts say GE’s dividend is threatened … huh?

Disclaimer: I’m biased — I own a bunch of GE stock and want it to do well.

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Wall Street analysts are all over GE because of  its dividend policy: it uses cash and the yield is very high at the stock’s current price (approximately 10%).

With a little over 10 billion shares outstanding, the annual dividend payout is about  $14 billion.

But, GE estimates about 40% of its shareholders are retail investors who count on the dividend.

And, analysts estimate that retail investors annually reinvest $4 billion to $5 billion of their dividends in the company’s DRIP

So, the net cash outflow is under $10 billion annually … and, oh yeah,  the company is sitting on $48 billion in cash (end of Dec) — up from $16 billion (end of Sept.)

I must be missing something … 

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Reference:
http://www.thestreet.com/story/10459290/1/ge-dividend-a-cause-for-concern.html?puc=_cnnmoney&cm_ven=CNNMONEY&cm_cat=Free&cm_pla=Feed&cm_ite=Feed
 

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