Wall Street eyes ‘likely’ cut to GE’s dividend

While investors heralded Culp’s ascension, those on Wall Street believe GE is not out of the woods.

“At a minimum, we heard loud and clear from investors that a large, if not total, dividend cut is widely expected,” UBS analyst Steven Winoker said in an Oct. 16 note.

Winoker has a neutral rating on GE with a $13 a share price target. Both Tusa and Gordon Haskett’s John Inch have sell ratings on GE, with price targets of $10 a share and $11 a share, respectively.

“Investors appear to broadly expect a dividend cut. Given GE’s grim cash backdrop, the bigger the cut the better, in our opinion,” Inch said in an Oct. 24 note. The analyst said in a new note Monday there’s a chance the dividend cut may not be announced formally on Tuesday but at a later time.

But a dividend cut risks further upsetting the stock’s large retail ownership base. Inch estimates retail investors make up as much as a third of GE’s total shareholders. His firm’s survey of GE investors found retail shareholders “expect just a modest dividend cut by roughly” 10 percent, Inch said.

“GE’s challenges may ultimately prove too great even for Larry Culp,” Inch said. “We have the utmost respect for Larry Culp’s laudable skill sets. However, his professional track record would not appear to be wholly aligned with the task of working out GE’s long list of problems including liquidity issues.”

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