General Electric plans to slash its quarterly dividend 68 percent, to 10 cents from 31 cents a share, beginning in the third quarter.
The U.S. conglomerate said that it had no plans to raise additional equity, and that reducing its dividend from 31 cents a share would save it about $9 billion a year.
Shares of GE , the world's largest maker of jet engines and electricity-producing turbines, were down about 5 percent on the New York Stock Exchange Friday.
As recently as January, GE CEO Jeffrey Immelt, told CNBC that he had no plans to cut the dividend, which the company has paid for over 100 years.
"I think the tangible facts of what we've done here I think should let investors know that we've got the cash and the operating model that's going to secure the dividend in this environment," he said.
But earlier this month, GE said it would evaluate its planned second-half dividend, leaving open a possibility that it would reduce the quarterly payout.
"We recognize the importance of the dividend to our shareholders and the significance of this decision," Immelt said in a statement Friday. "But we believe it is the right precautionary action at this time to further strengthen our company for the long-term, while still providing an attractive dividend."
Still, troubles at its GE Capital finance unit had led some investors to wonder whether keeping the dividend was a good idea.
"I am personally happy to see it happen, even though we are a big shareholder," said Peter Sorrentino, senior vice president and portfolio manager at Huntington Asset Advisors, in Cincinnati. "It'll give them the ability to weather this storm better ... I know that it's in vogue to maintain a dividend, but that should never come at the expense of the franchise."
GE shares have lost more than 70 percent of their value over the past year amid investor concerns over the effect of the credit crunch on GE Capital, GE's financial unit.
Ratings agencies Moody's Investors Service and Standard & Poor's are reviewing their ratings of GE. Many analysts suspect the company will lose its "AAA" rating, largely due to the problems at GE Capital.
GE, which makes everything from locomotives to household appliances and is regarded as an economic bellwether, has been working to reduce its dependence on its GE Capital though efforts to sell off parts of that portfolio have proved unsuccessful during the credit crunch.
GE is the parent company of CNBC.
—Reuters contributed to this report.