Last week there was some major news in the financial world as General Electric (GE) slashed dividends by 90%, moving from $.12 per share down to a single penny per share. To date, according to S&P Dow Jones Indices and reported by the Wall Street Journal, GE has made three of the biggest dividend cuts since the Financial Crisis as total dividend payouts has decreased from their high of $8.87 billion in 2009 to what will be $4.17 billion for 2018.
The slash to GE’s corporate dividend brings back lessons of “Finance 101”, which is that dividends are not required but rather elected by the company’s board of directors. Dividends are paid out of the net profits of the company and are usually a sign of prosperity for a corporation who has elected to reward its equity owners with a share of the profits.
For individuals approaching retirement or who are currently in retirement stocks with high dividend yields were viewed as stable investments as the dividend payouts would provide income to the individual during this time. In today's retirement world with the lack of guaranteed income available retirees, finding a source of guaranteed cash flow is crucial to sustaining your retirement plan.
Where will you find your source of guaranteed income throughout your golden years? If you’re not sure or think your current financial plan may have some holes in it, lets set up some time to discuss today.
Read more about GE's news in the article below.