During the darkest days of the financial crisis, General Electric did the unthinkable and slashed its dividend for the first time in 71 years. The widely-held conglomerate nearly pulled the plug completely as the dividend was cut to 10 cents from 31 cents in February 2009. Since then, GE has been trying to rebuild its business operations and shareholder trust.
So, does GE belong in your portfolio?
Founded in 1892, GE is now one of the world’ s most valuable companies. The Connecticut-based company is known by consumers for its appliances, while investors typically focus on its infrastructure and financial services that “ build, power, move, and cure the world. ” In recent years, GE has shifted away from finance operations, making moves such as spinning out its Synchrony Financial business. This appears to be paying off as earnings and dividend payments are on the rise.
In January, GE reported that net income in the fourth quarter surged 61% year-over-year to $5. 2 billion. Industrial segment profit gained 9%, with 6 of 7 segments growing earnings. One of the few sore spots was GE’ s oil and gas business, where orders fell 10%. This was not too surprising considering the rapid plunge in oil prices over the past six months, and was easily offset simply by other revenue streams. General, total revenue in the 4th quarter grew 4% in order to $42 billion.
“ GE ended the entire year with strong fourth-quarter commercial earnings and margin development. The environment remains volatile, yet we continue to see facilities growth opportunities, ” mentioned Jeff Immelt, CEO plus Chairman of GE. “ We are pleased with our performance in 2014: Meeting responsibility to grow industrial segment revenue 10%, industrial segment natural revenue growth of 7%, increasing operating margins fifty basis points, decreasing expenses by $1. 2 billion dollars, reducing the size of GE Funds and returning $11 billion dollars to share-owners. ”
Shareholders are still awaiting the dividend to return in order to 31 cents per discuss, it’ s pre-crisis degree, but GE has elevated its quarterly dividend 7 times in the past five yrs. The current quarterly payout will be 23 cents per discuss, which is relatively safe plus good enough for a yield associated with almost 4%. Nonetheless, the particular share price has been trapped without any momentum power for more than a year, failing to break by means of $27 more than once. Returning money to shareholders will carry on as long as earnings improve, yet massive companies such as GENERAL ELECTRIC take time to turn around. Investors keeping GE shares for gross payments will need to be patient using its share price. If endurance isn’ t your factor, you should probably look somewhere else.
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