GE Capital Corporation, an operating unit of
General Electric Company
), has recently announced that its Board of Directors has
approved a proposal to pay a dividend of $6.5 billion in 2013 to
its parent. The dividend payout is based on 30% of estimated GE
Capital's earnings in 2013.
In accordance with this plan, GE Capital has already paid $447
million as first quarter dividend to General Electric. In
addition to the regular quarterly dividends, GE Capital also
intends to pay special dividends to the tune of $4.5 billion in
2013 to its parent entity.
The hefty dividend payments are part of the long-term strategy of
GE Capital to reduce its size and simultaneously return
significant cash to General Electric. Consequently, as GE Capital
earnings increased 9% in first quarter 2013, ending net
investment or ENI (excluding cash and cash equivalents) declined
7% to $402 billion with cash balance of $68 billion.
On its part, General Electric intends to return $18 billion cash
to shareholders through steady dividend payouts and share
repurchases under its balanced capital allocation plan for
investment for long-term growth.
General Electric is one of the largest and the most diversified
technology and financial services corporations in the world. With
products and services ranging from aircraft engines, power
generation, water processing, and security technology to medical
imaging, business and consumer financing, media content and
industrial products, the company serves over 100 million
Its segments include Power & Water, Oil & Gas, Energy
Management, Aviation, Healthcare, Transportation, Home &
Business Solutions, and GE Capital. Equipped with a diverse
product portfolio, ranging from consumer lending to financial
solutions, GE Capital meets the financial needs of businesses of
all sizes. The segment includes General Electric's Commercial
Lending and Leasing, Consumer, Real Estate, Energy Financial
Services and GE Capital Aviation Services businesses and General
Electric Capital Corporation Corporate.
General Electric currently has a Zacks Rank #3 (Hold). Other
companies in the industry that are worth mentioning include
Honeywell International Inc.
), each carrying a Zacks Rank #2 (Buy).
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