This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

General Electric's Dividend 'Machine' Will Continue Pumping

Stocks in this article: GE

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.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,416.85 +225.48 1.31%
S&P 500 2,021.25 +19.09 0.95%
NASDAQ 4,683.4070 +45.4130 0.98%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs