At the beginning of the month, I wrote that General Electric (NYSE:GE) CEO Jeffrey Immelt was signaling to the market that he was favoring maintaining the firm’s dividend over its AAA credit rating. Either I misread him or he changed his mind in the interim. Immelt announced today that the company would cut its dividend by two-thirds, from $0.31 per share to $0.10 per share.

Actually, it’s no big surprise by now
In truth, the cut had already been factored in by investors; based on yesterday’s closing price, the dividend yield on GE shares was 13.6% -- a bit rich to be sustainable. Even at $0.10 per share, the annual dividend yield is 4.4%, or about one and half percentage points above the 10-year Treasury yield.

The reduction in the dividend will produce significant cash savings, approximately $9 billion on an annual basis. The move is also a gesture of goodwill toward the credit rating agencies that are reviewing GE’s rating.

Come on in, you’re on the list
Immelt is eating a little crow over the dividend, but he is simply joining a crowded banquet. The list of companies that have cut their dividends recently reads like a who’s who of corporate America (admittedly, many of them are financials), including JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Dow Chemical (NYSE:DOW), Motorola (NYSE:MOT), and Pfizer (NYSE:PFE).

Who’ll be next? Wells Fargo (NYSE:WFC) looks like it might be due -- the shares are currently yielding around 10% -- despite having increased its dividend in the third quarter of last year.

Numbers speak louder than words
The lesson here is that CEOs are having as much difficulty wrapping their heads around the magnitude of the current crisis as anyone else. Investors can’t rely on executives’ reassurances that a company will maintain its dividend, as these may not be based on an objective assessment of economic fundamentals. However, the numbers don’t lie: Dividend-oriented investors must be extra diligent in analyzing a firm’s financial position and earnings power through the downturn. It’s the only way to avoid being faked out by an over-optimistic CEO.

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Alex Dumortier, CFA, has a beneficial interest in Wells Fargo, but not in any of the other companies mentioned in this article. Pfizer and JPMorgan Chase are former Motley Fool Income Investor picks. Pfizer is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.