On Friday, industrial conglomerate General Electric (click ticker for report: ) raised its dividend 12% to $0.19 per share per quarter (slightly better than we had expected), and it also added $10 billion to its share buyback program. The firm didn’t give any additional updates, but both moves display management’s confidence in the company’s future. We plan to update our dividend report on GE soon.
The higher dividend payout gives shares of GE a 3.5% yield at current levels, making it a relatively attractive income play, in our view. In its third quarter, GE reported positive earnings growth across all 5 of its industrial segments for the first time since 2005, so the firm’s fundamentals are heading in the right direction.
We think GE’s earnings improvement coupled with the shrinking of GE Capital has made its dividend policy more stable over the long run. We’d be most interested in adding the company to the portfolio of our Dividend Growth Newsletter if shares fall below the lower bound of our fair value range. We’re watching GE closely.