General Electric Company (NYSE: GE) is now going to be much further to being back on track in its GE Capital unit. After having promised a return to dividend after proper approvals had been granted, General Electric Capital Corporation has declared a quarterly dividend of $475 million that it will pay directly to the parent company of General Electric in the second quarter 2012. This is sooner than expected and it supports yet more dividend hikes from the parent company. GE said that the GECC 2012 dividend payments are being set at roughly 30% of the finance unit’s total 2012 earnings.
Here is where the news really gets interesting for GE… In addition to the second quarter dividend from GECC, the unit is now planning to pay a special dividend of $4.5 billion to GE in 2012.
GECC had to suspend the historical dividend in 2009 during the financial crisis. As a result of the dividend and the special dividend, General Electric said that it plans to accelerate its common stock buyback starting in the second quarter if market conditions permit.
GE shares are up 1.8% at $18.73 against a 52-week trading range of $14.02 to $21.00 and its dividend on the common stock is currently almost 3.6% paid to public shareholders.
JON C. OGG