iNVEZZ.com, Saturday, December 14: General Electric Co (NYSE:GE) yesterday raised its quarterly dividend by 16 percent to 22 cents a share – the first increase since last year when the US industrial giant hiked the payout to 19 cents from 17 cents.
Following the dividend announcement, GE’s share price closed 1.13 percent higher at $26.84 on the NYSE.
The dividend for the fourth quarter is payable on January 27 next year to shareowners of record at the close of business on December 23. The ex-dividend date is December 19, the company said in a statement.
The dividend increase is part of GE’s plan to return more cash to investors that included share buybacks worth a total of $8.0 billion in the first nine months of 2013. It is also a further step towards restoring the dividend to pre-financial crisis levels. The company is intending further share buybacks funded by the planned flotation of its North American retail finance business, which will be spun off over the next two years.
In October, GE logged stronger-than-expected third-quarter earnings although its profits fell 8.6 percent due to charges and a revenue slowdown at its finance arm.
The group will hold an annual presentation of its planned strategy and capital allocation on Wednesday.
GE’s share price has risen from a low of $20.44 on December 28 last year to a 52-week high of $27.19 on December 9 this year.
The Financial Times noted that on a historic basis GE’s shares already yield 2.9 percent, compared to 2.2 percent for both United Technologies, the closest comparator of the group among US companies, and Germany’s Siemens, GE’s leading global competitor.
Analysts at TheStreet Ratings commented: “The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
“Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year,” the analysts said.
GE’s results this year have indicated the group is on track to post a double-digit growth in industrial earnings, propelled by improved margins after a cost-cutting programme. However, its organic industrial revenue growth is expected to be at the lower end of the range of between two and six percent that GE forecast at the beginning of 2013.
GE's products include oil and gas drilling equipment, jet engines, medical diagnostic equipment and washing machines. GE has been manoeuvring itself into a conglomerate more focused on industrial equipment and appliances, selling off its media arm NBCUniversal and shrinking its financial business. The group’s financial services division, GE Capital, has often been the best performer within the group and scaling back the financial operations has raised questions about GE’s growth outlook.
As of Friday 13 December, buy GE shares at $26.93
As of Friday 13 December, sell GE shares at $26.80
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