Goldman Sachs Said General Electric (GE) Could Raise Dividend 30% Soon

Analysts at Goldman Sachs made positive comments on Dow component General Electric Co. (NYSE: GE) today, saying an improving outlook could support a dividend increase. While the shares have underperformed since third quarter results, Goldman thinks the stock can regain momentum over the next several weeks, with a key GE Capital outlook webcast coming on Tuesday, December 7 and GE annual outlook investor meeting on December 14. The meeting could "refocus investors on potential for multi-year EPS growth at GECS, an Industrial upturn in 2012 and increasing impact from capital allocation." For GESC, Goldman projects 2011 pretax/net income of $6.1 billion and $5.4 billion, respectively, which is up sharply from $2.2 and $3.2 billion in 2010. The firm said ongoing improvement in GECS fundamentals should "not only increase investor confidence in a strong 2011-2013 EPS recovery but also enhance visibility on resumption of the GECS dividend to the parent in 2012." Improvement in GESC and continued strong industrial CFOA should enable a strong 30%+ increase in the common dividend, Goldman suggests "GE historically announced dividend increases in December, though the company may prefer to wait until 2011 for improved visibility on the sustainability of the recovery." The firm reiterated their $19 price target and Buy rating on GE. If Goldman is correct and GE raises their dividend 30%, this would equal an annual dividend of $0.624, up from the current level of $0.48. This would boost the dividend yield to 3.7% from the current level of 2.9%.... Read more

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