Hints of the GE Dividend Hike (GE, MMM, UTX)

As we have been expecting for a month or more, General Electric Co. (NYSE: GE) is now acting as though it is probably closer to raising its dividend than what some were expecting even at the start of the 2010 period.  GE hated to cut its dividend a year ago to $0.10 from $0.31 per quarter, but extreme times demanded extreme action.  CFO Keith Sherin was speaking this morning at the Goldman Sachs Industrials Unscripted Conference about GE’s prospects and its dividend.  We noted last month how a recent 3M Co. (NYSE: MMM) dividend hike was only likely to add pressure to GE to begin to take its dividend higher.  Ditto for United Technologies Corp. (NYSE: UTX).  While we did not get the sense that GE was going to boost its dividend at its Annual Meeting in late-April of this year, the dividend hike still feels closer rather than farther away.

CFO Keith Sherin was not specific as to how high or when the dividend hike would come, but he did note, “…we do expect to grow the dividend in 2011.”

Sherin also said that GE may buy back shares of stock, repurchase preferred shares, do acquisitions with its extra cash despite flat earnings expected in 2010.  Sherin noted that earnings in the first quarter could be weaker than a year ago on Olympics losses and a tax-gain in the year ago period.  That coincides with a Thomson Reuters estimate today of $0.16 EPS for Q1 versus a $0.26 EPS figure a year ago.  But Sherin also noted that results should improve over the rest of the year.

The financial service losses are also expected to peak in 2010, although the company remains concerned that commercial real estate investment losses could be seen.  Still, Sherin noted that the situation is not as dire as what had been seen.  Frankly, this is par for the course and there did not seem to be any new hidden or ticking time-bombs here.

It was early this morning that JPMorgan raised the estimates of GE  with lower losses and expanding margins.  JPMorgan took the earnings up to $1.00 EPS for 2010 and $1.30 for 2011 (versus Thomson Reuters estimates of $0.99 EPS and $1.21 EPS, respectively).

GE shares are up 2.1% at $17.66 on just over 100 million shares at 12:30 PM EST.  We saw GE hit a new 52-week high of $17.76 earlier this morning.

JON C. OGG