GE Issues Big Surprise Dividend Hike… The 2012 Model Dividend Portfolio Grows Again (GE, BRK-A)

24/7 Wall St. has just this week released its 2012 Model Dividend Portfolio and General Electric Co. (NYSE: GE) was one of the members of that dividend portfolio.  The conglomerate has just come out and surprised us with a dividend hike.  Common sense would have dictated that this hike would have come in 2012.

GE raised its quarterly payout by $0.02 to $0.17 per quarter as the company tries to move back towards its old payout rate.  This dividend will not come until 2012 and is payable on January 25, 2012 to shareholders of record as of December 27, 2011.  The stock’s ex-dividend date is December 22, 2011.

Again, this is even sooner than we expected and it was not expected by many in the market.  GE shares were already yielding 3.7% as is.  Now the stock is up 2.9% at $16.78 and the new dividend yield will be just over 4% now.

Jeff Immelt noted that GE has redeemed the Berkshire Hathaway Inc. (NYSE: BRK-A) preferred shares and is redeploying its NBC Universal capital into other growth areas.  It was just this week that the company’s GE Capital forecast that its metrics have continued to improve and that it would start paying a dividend back to the parent company as soon as it was cleared to do so.  Be advised that this is the fourth dividend hike in two years since GE had to cut its payout to more easily get through the recession.

Immelt also noted, “We believe that the GE business model will continue to deliver strong earnings and cash flow growth going forward.” 

As far as what this translates to based upon the Thomson Reuters consensus estimate of $1.56 EPS for 2012, the dividend payout ratio is about 43.5% of expected earnings per share.  As far as the 2011 consensus of $1.37 EPS, the payout ratio is far higher at nearly 50%.

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JON C. OGG