Tags: GE | Raise | Dividend | 2009

GE Poised to Raise Dividend in Climb Back from 2009 Cut

Thursday, 11 Dec 2014 05:28 PM

General Electric Co. is poised to raise its quarterly dividend as Chief Executive Officer Jeffrey Immelt rebuilds the payout he chopped during the recession.

Immelt has said the dividend would grow in line with earnings, which would imply an increase of about 2 percent from the current distribution of 22 cents a share, based on analysts’ profit estimates. The payout may be boosted Friday to as much as 25 cents, according to a Bloomberg forecast.

GE cut the dividend to 10 cents from 31 cents in February 2009, the first reduction since the Great Depression for a company known for consistent returns to stockholders. Immelt has worked since the recession to shrink GE’s finance arm, including selling real estate and foreign bank holdings, and expand its high-margin manufacturing units.

“They had a long history of dividend increases,” said Jack De Gan, chief investment officer of Portsmouth, New Hampshire-based Harbor Advisory, which manages about $130 million. “It’s part of the thesis of why we own the shares. We’ve got many retired clients and income is important and growth is secondary.”

GE’s cash reserves surpassed $137 billion as of Sept. 30, aiding efforts to reward investors, and the Fairfield, Connecticut-based company also can still repurchase more than $10 billion of stock under its buyback plan. The shares rose 0.6 percent to $25.41 at the close Thursday in New York.

The last dividend increase was declared in December 2013. Immelt and his top executives will meet with investors and analysts in New York on Dec. 16 to discuss GE’s 2015 outlook.

Earnings Link

The company will “continue to grow the dividend aligned with earnings,” Immelt said at an industry conference in May. GE adjusted earnings this year are expected to rise about 2 percent to $1.67 a share, the average of 16 analysts’ estimates compiled by Bloomberg.

Each 1-cent increase in the quarterly dividend would cost about $100 million, based on about 10 billion shares outstanding as of Sept. 30. GE is forecast to return to a 31-cent payout in 2016, according to the Bloomberg projections, which use criteria including dividend history, company forecasts and regression analysis.

The dividend provided a yield of 3.46 percent during the 12 months through Wednesday, the highest of the 64 companies in the Standard & Poor’s 500 Industrials Index.

The yield moves inversely to share price, rising when the stock falls. GE has lagged behind peers, declining 9.3 percent this year while the industrials gauge advanced 5.8 percent.

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General Electric Co. is poised to raise its quarterly dividend as Chief Executive Officer Jeffrey Immelt rebuilds the payout he chopped during the recession.
GE, Raise, Dividend, 2009
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2014-28-11
Thursday, 11 Dec 2014 05:28 PM
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