WSJournal. GE Boosts Dividend, Buyback
http://online.wsj.com/article/SB1000142412788...;mg=id-wsj
General Electric Co. GE 0.00% increased its dividend and said it would buy back another $10 billion worth of shares, as Chief Executive Jeffrey Immelt seeks to reward investors and mop up stock the industrial conglomerate issued to shore itself up during the financial crisis.
The quarterly dividend was raised by 12% to 19 cents a share, which will be paid in January and should cost the company an additional $211 million a quarter. The annual yield is now about 3.5%. The buyback program, which had about $4.9 billion in remaining authorization at the end of the third quarter, was extended through 2015.
GE's dividend remains well below its level before the financial crisis. In 2009, facing investor concerns about souring investments at the company's giant lending arm, GE slashed its dividend from 31 cents to 10 cents and raised $12 billion selling shares. Both steps were painful for investors. Now GE, with a stockpile of $85.5 billion in cash, is making a priority of boosting payouts to shareholders.
In the first nine months of the year, GE paid out $8.4 billion in the form of dividends and share buybacks. Mr. Immelt has said the company will pay out 45% of GE's profits as a dividend and seeks to lower the number of shares in circulation by 500 million, to 10 billion.
To right the ship and drive growth, Mr. Immelt has been working to shrink GE's finance arm and expand the industrial businesses by investing in emerging markets and new products. The company has also put the brakes on major acquisitions, instead favoring smaller deals of up to $3 billion.
Earlier this year, the company resumed paying a dividend from GE Capital to GE proper, allowing the parent company to take profits from its finance unit to pay shareholders and fund industrial businesses that make things like diesel locomotives, gas turbines and jet engines. In the five months through the end of September, GE Capital paid $5.5 billion to the parent.
GE shares, which ended unchanged Friday at $21.62, have risen 21% this year. In late 2007, before the onset of the financial crisis, they traded above $42.
