Industrials
GE Dividend Focus Ahead of Annual Investor Meeting Outlook (GE)
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General Electric Co. (NYSE: GE) was recently reestablished on the 2012 Model Dividend Portfolio by 24/7 Wall St. The company surprised us with a jump-start as it raised the dividend far sooner than we expected.
Now we have a Stern Agee report after the dividend was raised to $0.17 from $0.15 per quarter. Stern Agee’s Ben Elias noted that the dividend hike was expected and is now looking for what else lies ahead. First and foremost, the annual meeting outlook for 2012 is taking place this week (Dec. 13) and may be another catalyst.
The report notes, “After the GE Capital investor meeting there is a higher level of confidence that GE Capital has the financial strength, liquidity and reserves to pay the dividend to the parent, but little faith in the regulator’s ability to be able to familiarize themselves with GE Capital’s operations and approve the dividend payment before Year-End 2012.”
The firm noted that a higher dividend contribution could come from greater confidence in the industrial businesses, higher profitability, lower delinquencies and adequate provisions for losses as well as secured funding at GE Capital for 2012.
If the historic reversion comes and the dividend trends to 2.5% to 3.0% (Currently more than 3.5%) then there could be significant upside to the current share price.
Stern Agee’s rating is “BUY” and its price target objective is $22.75; Thomson Reuters still has a price target of only about $20.98 on the stock. At $16.40 after more than a 2% drop today, GE’s consensus price target implies upside of about 28% (plus that near-4% new dividend yield). If Stern Agee’s call is correct then there is more than 40% upside if you combine the yield and the price target.
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