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After GE Slashes Its Dividend, Who Will Be Next?

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After GE Slashes Its Dividend, Who Will Be Next?
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General Electric Company (NYSE: GE) announced a series of plans Monday to improve its business moving forward, perhaps the most notable of which consists of a 50 percent reduction to its dividend payment.

The Expert

Herb Greenberg, managing partner of Pacific Square Research and CNBC contributor.

The Thesis

One of the biggest takeaways from GE's investor day presentation is that its recently appointed CEO John Flannery gets credit for swallowing a "bitter pill," Greenberg said during CNBC's Squawk Alley segment. Now the executive can not only reset expectations, but "ignore everything else and move on from here."

Flannery's move to slash GE's dividends may pave the way for other executives to follow suit, Greenberg said. After all, Flannery is making cash flow a "front and center" part of GE's turnaround story, which may mark an end to the company's reputation among some dividend seekers as being a "safe hiding place" dating back to "forever," Greenberg said. 

Looking forward, one of the potential companies who may follow GE's lead is Kellogg Company. (NYSE: K), Greenberg said. Similar to GE, Kellogg has a new CEO and has also been attempting to pull multiple levers to spur growth to navigate short-term company specific issues, he said. 

"You look at the cash flow — what you really think the cash flow, or the quality of the cash flow is, and you say 'hmmm, what's going to happen going forward?'" Greenberg said. "Can they keep it going?"

Price Action

Shares of GE hit a new 52-week low of $19 and were trading lower by more than 7 percent Monday afternoon.

Related Links:

Cramer's 'Biggest Mistake'? Owning General Electric's Stock

JPMorgan Cuts Target On GE To $22: 'We Don't See The Future Growth Potential'

Posted-In: CNBC dividends General Electric Herb Greenberg John Flannery Squawk AlleyMedia Best of Benzinga

 

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