By STEPHEN SINGER - AP Business Writer - Associated Press
Tuesday, March 16, 2010
General Electric Co. says it will increase its dividend in 2011, two years after the industrial and commercial conglomerate reduced it to save money as its financial arm struggled in the recession.
Chief Financial Officer Keith Sherin told analysts at a conference Tuesday that the Fairfield, Conn., company expects its dividend to resume increasing next year. The company also sees potential for retiring its preferred stock and opportunities for stock buybacks, he said.
In early 2009, GE said it would cut its quarterly dividend to 10 cents per share from 31 cents. It has remained at 10 cents per share since then.
The dividend cut was GE's first since the Great Depression. It was intended to save $9 billion a year.
GE's finance arm, GE Capital, had been the largest profit driver at the company but as the financial crisis intensified, it posted mounting losses on growing loan defaults.
Analysts last year questioned GE's ability to pay a generous dividend while it hunted for money to shore up GE Capital, which makes a wide range of loans for overseas home mortgages and big energy projects and was stung badly when credit markets seized up in 2008.
On Tuesday, analyst C. Stephen Tusa Jr. of JPMorgan said he believes losses at GE Capital are peaking and should begin to decline in the middle of this year.
"We believe that, for the first time in over 10 years, the pieces are in place for earnings upside," he wrote in a note to investors.
GE said it expects earnings per share for 2010 to be flat compared with the $1.03 per share it earned in 2009. Analysts surveyed by Thomson Reuters expect GE to earn $1 per share this year.
GE, which does not give quarterly earnings guidance, also said it expects tough comparisons in the first quarter. However, GE said it expects comparisons to "significantly improve" after the first quarter.
"This is the best outlook for the company in many years," Sherin said.
Shares of GE rose 54 cents, or 3.1 percent, to $17.83 in afternoon trading. The stock earlier traded at a new year high of $17.84, eclipsing a prior peak of $17.52 set in September.