GE Capital Dividend to GE, Prelude to a Higher GE Dividend for You!

The $6.5 billion will be paid in two parts. The first is a normal $2 billion earnings distribution. The second is a special dividend of $4.5 billion. Immelt confirmed the plans to continue shrinking GE Capital.

The earnings distribution is roughly 30% back to the parent. While we expect a higher dividend from GE in late 2013, the special dividend payment is more than two-thirds of the distribution. Even with some $68 billion in cash on the GE Capital balance sheet, higher normalized dividends usually require steady income rather than a special dividend to get to steadily higher dividends.

GE has told us that if it can trim GE Capital by 10% of its total portfolio, then it will be valued more as an industrial conglomerate rather than a conglomerate too dominated by the finance unit. GE did confirm that it still plans to return $18 billion cash to its shareholders in 2013, including the repurchase of some $10 billion of common stock.