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Is The Bottom Finally In For Top Dividend Stock GE?

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G eneral Electric ( GE ) has been raising its dividend and trying to boost its stock price as it refocuses on its core industrial business. The stock got a lift Monday when Trian Fund Management, run by activist investor Nelson Peltz, announced that it had accumulated a $2.5 billion stake on expectations that GE "will generate attractive stockholder returns in the years ahead."

Fairfield, Conn.-based GE announced in April that it will jettison most of its GE Capital finance arm to focus on its industrial business, which includes jet engines, medical equipment, power plants and a wide range of other products.

Trian sees the stock rising to 40 to 45 a share by the end of 2017. GE jumped 5% Monday to 26.82 a share, clearing its 200-day moving average in more than double its average daily volume.

GE's stock is up about 6% this year. The dividend's long-term growth rate of 16% trails onlyGameStop ( GME ) andCisco Systems ( CSCO ) in the 16-stock IBD Dividend Leaders screen.

GE slashed the payout in 2009 for the first time since the Great Depression, as losses piled up at GE Capital and the industrial business suffered due to the global recession.

But the company has increased the payout every year since. The latest increase came in December, a 5% hike to 23 cents a share.

The annual dividend of 92 cents a share yields 3.6% at the current stock price, above the S&P 500 average of 2.1%.

Still, earnings look set to get worse before improving next year amid the sluggish global economy.

Profit for this year is expected to fall 8% to $1.30 a share on a 16% decline in sales to $125.6 billion. For 2016, profit is seen rebounding 18% on a 4% increase in revenue.

GE's five-year earnings stability factor is 6 on a scale of zero to 99, with zero being most stable.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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