A strategy that aims to generate steady income in retirement is looking less certain as General Electric announced it would cut its quarterly dividend in 2019.
The company announced it would trim the dividend to a penny per share starting next year, marking the second cut to its dividends in a year.
Dividends traditionally are a way for firms to return profits to shareholders.
News on GE's dividend cut arrived on the heels of the company announcing its third-quarter results, wherein it reported adjusted earnings per share of 14 cents. GE shares swooned on Tuesday morning, falling by more than 8 percent.
For a certain group of investors — particularly retirees — a blue-chip company's tumbling share price tells only part of the story: A sharp cut to dividends could mean that their own cash flow could fall short.
"With dividends, your retirement income is susceptible to the whims of the board of directors or the profitability of the company," said Benjamin Brandt, a certified financial planner and founder of Capital City Wealth Management.
"Dividends can be cut," he said.
Here's what you need to know about using dividends in your retirement income strategy.