General Electric Co. (NYSE: GE) is still on the path toward a higher dividend. It is also may begin buying back stock, taking other shareholder-friendly initiatives, and maybe even making acquisitions. CEO Jeff Immelt addressed the Electrical Products Group Conference in Longboat Key, Florida this morning, and this was effectively being deemed as a Immelt’s mid-year strategy update.
According to a transcript fro, G.E., Immelt noted, “…a dividend growth in line with earnings growth by the end of this year at about 45% payout ratio, somewhere there. The preferred as it comes we’re going to be thinking about lots of good approaches on the preferred.”
As far as M&A, Immelt noted, “Acquisitions I would say in the $1 to $3 billion range, all in infrastructure, energy and oil and gas in that space.” This is a bit more specific than what he said when I him last month before the annual shareholder meeting in Houston, and it does exclude some other areas that Mr. Immelt noted as opportunities.
On share buybacks, that is coming down the pike soon as well. Immelt hinted at this in the interview, but noted today, “And then very opportunistic around buybacks. I say, under $22 a share. This is a high return opportunity and we’ll launch (the) buyback by the end of this year. So I think we’ve got enough cash to do all four of these things, right. That’s the way I think about it is, we can pick (and choose) …”
As far as the timing of the dividend, Immelt noted, “…its by the time we get 2011.” This of course requires board approval, but barring a major spreading of the E.U. wildfire it seems a safe lock that Mr. Immelt will be announcing this either before the end of the year or right at the start of 2011.
If you want a prediction, here goes: GE’s current common dividend is $0.10 per share per quarter. It used to be $0.31 per quarter. While not hanging any formal hat on the “45% payout,” it seems a safe bet that the dividend goes up a minimum of 50% to $0.15 per quarter. Stay tuned.
JON C. OGG
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