UPDATE: This article, originally published at 6:33 a.m. EDT Friday, May 8, has been updated with dividend history and yield information.
NEW YORK (TheStreet) -- General Electric (GE) CEO Jeffrey Immelt will be playing a delicate balancing act over the next three years as he sells off parts of the GE Capital finance unit while funding a share buyback of up to $50 billion.
The repurchase is part of GE's plan to keep the conglomerate's stock price level through 2018 while winding down the lucrative finance unit. GE Capital generated about a third of the parent company's sales last year, so selling off most of it will squeeze earnings and potentially drag down the stock price.
The good news is that because of high interest in what GE is selling, analysts say Immelt may be able to execute his plan faster than he predicts.
"GE was very bullish about the interest level in asset sales," Scott Davis, a Barclays analyst, said in a report for investors on April 20. "We believe GE will likely complete these asset sales quicker" than the three years in the company's timetable. GE has said that it hopes to complete the bulk of U.S. asset sales by the end of 2016.
Immelt, who has been trimming GE Capital since the financial crisis, originally planned to reduce it to 25% of total earnings by 2018 but surprised investors in April by cutting that share to 10%.
The sudden shift was spurred by a chain of events, starting with the spinoff of Synchrony, formerly GE Capital's retail finance unit, which showed that investors valued financial businesses more highly outside the GE umbrella, Keith Sherin, the head of GE Capital, said on an April 10 call with stockholders and analysts.
At the same time, GE Capital's lending model had become less competitive with banks. Then, in February, the government released guidelines on the "systemically important" risk tag applied to GE Capital in 2013 that gave the company a path to shedding that designation and the regulatory requirements that went along with it, Sherin said.
GE "sees speed as the biggest single risk associated with price and value" of the businesses it's selling, Henry Kirn, an analyst with Societe Generale, said in a report April 20. "The company is going to evaluate level of interest in" individual businesses and balance selling those at potentially higher prices against making several large package deals, he said.
Using the money from those deals for the $50 billion buyback will return cash to shareholders and may buoy the price of remaining shares. GE plans to further reduce the number of outstanding shares -- which would help it meet its earnings-per-share goal for 2018 -- by letting investors swap them for stock in Synchrony.