Dividend or Dividumb? General Motors (GM)

From Dividend.com

General Motors-$13.79 (NYSE: GM) needs to think about its ability to compete in the future and one of the things they should definitely consider is eliminating their dividend for the near-term for starters. The company hit 26-year lows this week and rates a 2.8 out of five stars in our system. Plagued by high gas prices that have driven customers away from trucks and sport utility vehicles, management has decided to ramp up production of fuel-efficient vehicles. If only leadership could have seen the oil and gas crisis before it took this toll. Standard & Poor’s placed GM’s corporate credit ratings on CreditWatch negative this week, adding to worries.

Dividend stocks are not immune to the sell-offs we saw back in the Internet and Tech wreck of 2000. One of the things investors always need to realize is that the tape doesn’t lie. Maybe if GM takes action on their dividend and preserves some of their capital, this automaker can possibly set the stage for what would be a monumental comeback. Long-term investors should avoid bottom-fishing and wait for the company to take drastic action and hopefully that includes eliminating the dividend for now, righting the ship and then re-initiating the dividend. That’s when we can see the light at the end of the tunnel as investors.

Be sure to visit our complete recommended list of the Best Dividend Stocks as well as our ratings system here.

Dividend.com

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