GE Brings Back Dividend & Buybacks, Some May Have Wanted More (GE)

General Electric Company (NYSE: GE) could have picked a better time to release what we knew was coming, but at least it is finally here… GE’s board of directors just raised its quarterly dividend.  It has also juiced up the time for share buybacks.  This takes the dividend up 20% from $0.10 to $0.12 per share per quarter.   This takes the dividend up to a yield of 3.1% based upon a $15.40 share price rather than a 2.7% dividend rate.  Many will be pleased on this issue, but some investors may have wanted more.

The GE board declared that the dividend is payable October 25, 2010 to holders of record at the close of business on September 20, 2010. The ex-dividend date will be set at September 16, 2010.

The existing share-repurchase plan was set to expire on December 31, 2010.  That has now been extended out through 2013. The company noted that repurchases under the existing $15 billion repurchase plan were suspended on September 25, 2008 and that the $15 billion plan has about $11.6 billion in remaining authorization.  The important issue is this: The Company will resume share repurchases under the plan this quarter.

GE’s Jeff Immelt said in a recent exclusive interview that the decision was coming on this, but it sure seemed much later in 2010.  We originally predicted that GE’s hike would come as early as the summer (back in February), but softened after management insisted that the timeframe was probably later.

Here is why this may be a disappointing boost by at least some investors… On May 19, our own projection was as follows: “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