* General Electric (GE) Cuts Dividend

After months of saying the dividend was safe, the Board of Directors of General Electric Company (GE) Friday authorized a plan to reduce the Company’s quarterly dividend to $0.10 from $0.31 per outstanding share of the Company's common stock, effective for the second half of 2009. The company's news release stated the decision would preserve approximately $9 billion for the Company on an annualized basis. GE Chairman and CEO Jeff Immelt said:

* Inegrys Energy Group (TEG): Things That Make You Go Hmmm...

Utilities may not be the perfect dividend stock, but they should be one of the more predictible ones. This is not always the case. On Wednesday February 25th, Inegrys Energy Group (TEG) issued their earnings release after the market closed. In the release they forecast 2009 operating earnings of $2.51 to $2.66 a share, which unfavorably compared to the street estimate of $3.77/share. For the fourth quarter, TEG's earnings of $0.30/share fell well short of the street's estimate of $1.38/share. The market was not pleased. Yesterday (Feb. 26th), TEG's shares fell $9.77/share or 26.68%. Why?

Based on TEG's actions over the last several weeks, the market was completely surprised by its announcement. On February 17th, TEG issued a news release raising its quarterly dividend $0.01 to $0.68/share. As a dividend investor, I viewed this as a positive development and believed that management would only raise the dividend if it could be sustained. The annualized dividend of $2.72/share is in excess of the high end of its projected 2009 earnings range. Can TEG sustain its quarterly dividend at $0.68/share?

Looking at TEG's cash flow statement, I noted that free cash flow (operating cash flows less capital expenditures) was over three-quarters of a billion dollars negative in 2008, down from negative $154 million in 2007. More alarming is that operating cash flows in 2008 was negative. As I have previously noted in The Most Important Financial Statement, cash from operating activities should always be positive and greater than the company’s net income. Based on data from Morningstar, free cash flow has been negative for the last decade.

One might argue that management is counting on proceeds from the sale of its non-regulated business segment to sustain the dividend through 2009. If that is the case, I hope they have buyers lined up. Generally, these types of sales take time, a lot of time.

For me, the most concerning observation is the trading activity between the time the dividend announcement and the earnings release. In spite of the company's "good" news of its 51st year of consecutive dividend increase, the stock continued to fall on increasing volume. Year to date through February 17th, the stock's average daily volume was 719 thousand shares. From February 18th, the day after the dividend was announced through February 25th, the day earnings was released after the market, average daily volume was 1.2 million shares, or 66% higher. The 1.2 million average shares leading up earnings release were 87% higher than the 637 thousand average daily shares the week leading up to the dividend announcement (2/6 to 2/17). This could lead to an S.E.C. inquiry and/or shareholder suits.

I am all about personal responsibility. Yes, I am disappointed about the company's actions, including its shareholder communications, but I am more disappointed in myself for not spending sufficient time on diligence before purchasing TEG. In the end we will sometimes make bad decisions or have good investments go bad; we just need to learn from it and avoid the most dangerous investment.

Full Disclosure: Long TEG

Tags: [TEG]

* Utilities For A Well-Rounded Dividend Investment Portfolio

A well-rounded dividend investment portfolio just doesn't happen by accident. As noted in Charlie Munger’s 10 Rules for Investment Success, “Allocate assets wisely: Proper allocation of capital is an investor’s No. 1 job.” It is human nature to want to jump on the what's hot bandwagon and ignore what is considered boring, like utilities.

* Financial Crisis: Can You Spare A Dime For My Wealthy Friend?

So, the company you work for is starting to lose money and the layoffs have begun. You hold your breath as the names are read. Then suddenly it dawns on you - it just the working stiffs that are being affected. Is there something wrong with this picture? Where's the equity in this? Not to fear, after careful research I have determined this financial downturn is so bad, that even the well-to-do are suffering - at least in their own way. Consider the following:

* 3M Co. (MMM) Stock Analysis

This article originally appeared on The DIV-Net February 16, 2009.

Linked here is a detailed quantitative analysis of 3M Co. (MMM). Below are some highlights from the above linked analysis:

Company Description: 3M Co. is a diversified technology company with a presence in various businesses, including industrial & transportation, healthcare, display & graphics, consumer & office, safety, security & protection services, and electro and communications.

* Weekly Links - February 22, 2009

Each Sunday I highlight the Carnivals I participated in over the past week, along with any notable articles that I came across. For those readers not familiar with carnivals, it's where personal finance bloggers submit their best articles of the week with one blog serving as the host. The entries are separated into various categories such as Investing, Credit, Debt, Budgeting, Frugality, Wealth Building, Money Management, Financial Planning, Insurance, Taxes, The Economy, Real Estate, et. al.