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General Electric's Dividend 'Machine' Will Continue Pumping

NEW YORK ( TheStreet) -- General Electric CEO Jefferey Immelt said "our portfolio is the best it's been in a long time," when speaking at a conference late last month, but analysts don't expect any third-quarter fireworks.

GE will reports its third-quarter results early Friday morning, with a consensus earnings estimate 36 cents a share, among analysts polled by Thomson Reuters, declining from earnings of 38 cents in the second quarter, but increasing from 31 cents during the third quarter of 2011.

GE Capital

During the second quarter, GE Capital -- which for some time was a major drag on the General Electric's earnings -- paid the parent company $3.0 billion in dividends. Morgan Stanley analyst Nigel Coe said on Sep. 30 that he expected GE's financial arm to become a "cash machine," because GE Capital's "Basel I Tier-1 Common Equity ratio compares favorably to US bank peers and assuming maintenance of a 10% CT1 ratio, we see potential for $30bn cash distribution through 2015."

That will lend quite a bit of support for General Electric in turn to increase its capital return to investors. The company last December raised its quarterly dividend by two cents to 17 cents a share, for a dividend yield of 2.97%, based on Wednesday's closing price of $22.91. During the second quarter, GE repurchased 45,592 shares at an average price of $19.25, and had $7.0 billion in authorized share buybacks under its current repurchase program, as of June 30. Coe expects to see $4 billion to $5 billion in share repurchases through 2015, but sees "further upside"

When asked during a meeting with analysts on Sept. 27 whether he might consider sales of "some chunkier assets" from GE Capital, Immelt said "we are not going to do things that are kind of premature or disruptive," and that the company didn't "feel desperate or feel like we need to make a big moves," but he did say that "things aren't sacred," and that there would be "more news later" about reductions in assets.

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