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GE Capital to Pay $6.5 Billion Dividends to GE (Update 1)

GE Capital in January completed its purchase of $6.4 billion in deposits from MetLife (MET) subsidiary MetLife Bank. This brought GE Capital's deposits to $49.4 billion as of March 31.

General Electric had $90 billion in cash as of March 31. Immelt said during the company's first-quarter earnings conference call that it remained "committed to returning $18 billion to investors in 2013 through dividends and buybacks" of common shares. During the first quarter, GE repurchased $1.9 billion worth of shares.

GE's shares closed at $23.46 Friday, returning 13% this year, following a 21% return during 2012. The shares trade for 12.9 times the consensus 2014 earnings estimate of $1.82, among analysts polled by Thomson Reuters. The consensus 2013 EPS estimate is $1.66.

Based on a quarterly payout of 19 cents, the shares have a dividend yield of 3.24%.

GE's shares were flat in late morning trading on Monday.

BernsteinResearch analyst Steven Winoker rates General Electric "market perform," with a $25 price target. In a note to clients on Monday, Winoker wrote that GE Capital's Tier 1 common equity ratio at the end of March was at "a healthy level that supports the near term sustainability of the GECC dividend."

GE Capital's planed $4.5 billion in special dividends this year is right in line with what Winoker previously incorporated in his earnings estimates for General Electric of $1.62 a share for 2013 and $1.81 a share for 2014.

Winoker added that GE Capital's management team "has weathered the financial crisis well, improving their equity position even while shrinking the asset base and improving the quality of their portfolio."

"Overall, we do like GE's strategic direction, execution appears to be improving, earnings are growing and capital allocation is still sound," Winoker wrote. "However we still question how much you should pay for the stock."

"We believe something like a 50% premium to tangible book for GE Capital and as much as 16-17x 2013 earnings do not leave much near term upside," for General Electric's shares, Winoker wrote, "absent market moves and longer term earnings growth." GE Chart GE data by YCharts

Interested in more on General Electric? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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