General Electric: Eschew the Buybacks, Hike the Dividend More Meaningfully

General Electric (GE), trading at $19.62/share, has done rather well since its stock price troughed in early 2009. Even its two-thirds slashed dividend is recovering as it now stands at $0.60/share annually vs. $0.40/share at the bottom -- but that's still less than 50% of its $1.24/share payout in 2008, and also happens to be 50% of ttm EPS. While the '08-'09 stock price collapse was painful to watch, it has benefited those who dollar-cost-average (such as myself, via a DRIP), although such investors (non-employees) are likely in the minority. Nevertheless, as you can see in the accompanying stock chart (click to enlarge), GE's stock price remains at half its pre-crash high. At present, given GE's pruning back of GE Capital, its strengthening of its balance sheet, and its robust cash flows, GE has a good problem on its hands as it has more cash than it needs to reinvest... Read more

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