General Electric’s (GE) finance arm, GE Capital, will pay the parent company a $4.5 billion special dividend this year. GE Capital suspended the dividend in 2009, during the depths of the financial crisis.
It’s another sign that the company’s balance sheet is strong — the Fed needed to approve the payment — and that shareholders can expect to be getting more cash back. For now, GE is planning to “accelerate its common stock buyback starting in the second quarter, depending on market conditions.”
Sanford Bernstein analyst Steven Winoker told clients that the dividend payout was bigger and came earlier than he had expected, calling it a “positive surprise,” according to Bloomberg. He had expected the announcement to come in the second half of the year and for the dividend to be about $3.2 billion.
Dividend payouts from GE itself have been a catalyst for the stock in recent quarters, although GE shares have been stuck in a tight range of late and are down 4.7% over the past year. Shares are up 2.5% on today’s news.
�As we have stated, our goal has been to resume the GE Capital dividend to GE in 2012,� GE Chairman and CEO Jeff Immelt said. �With this announcement, GE Capital will return cash to GE beginning this quarter. This action demonstrates the strength of GE Capital and the significant actions taken to strengthen its liquidity, capital, asset quality and profitability. These actions have included increasing liquidity to $76 billion, increasing Tier 1 capital to 10.4%, reducing ending net investment to $436 billion and increasing net income in 2011 to $6.6 billion.�
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