GE hikes dividend 20 percent after deep cut last year, plans to resume stock repurchases

GE raises quarterly dividend 20 percent

More than a year ago, in need of cash after its GE Capital lending unit was overwhelmed by the financial crisis, General Electric did the nearly unthinkable — it slashed its dividend for the first time since the Great Depression.

Now, flush with cash, the conglomerate is starting to reward shareholders again.

GE boosted its quarterly dividend by 2 cents to 12 cents per share Friday, a modest gain compared to the 68 percent cut it made in February 2008 when the GE was in crisis. But GE said the increase, earlier than expected, was a sign that things are much better.

The dividend was increased and accelerated “because of continued strong cash generation, recovery at GE Capital and solid underlying performance in our industrial businesses,” said CEO Jeff Immelt.

Shares of GE rose 50 cents, or 3.3 percent, to close at $15.71 Friday.

The company will also start buying back its shares again, and plans on looking at “strategic and financially attractive inorganic growth opportunities,” raising the prospect of future acquisitions.

GE’s moves come after its financial picture brightened in the first half of the year. Last week, it reported a 16 percent gain in quarterly profits, its first growth in net income since late 2007.

It has made strides in reducing the size of GE Capital, whittling down losses on bad loans, all while building back the industrial divisions that make jet engines, power-plant turbines and medical equipment.

Just as significant is the big reserve of cash that GE expects to amass by the end of the year, a projected $25 billion. Some of that money will come from its plan to sell a majority stake of the NBC Universal entertainment division to Comcast, a deal expected to close later this year.

GE, which is based in Fairfield, Conn., had earlier said it planned to raise its dividend beginning in 2011.

The company will now pay 12 cents per share on Oct. 25, to shareholders who own stock at the close of business on Sept. 20. There are roughly 10.7 billion shares of GE stock.

GE’s board also revived the $15 billion share repurchase program that was suspended in September 2008. The program, extended through 2013, has roughly $11.6 billion in remaining authorization.