How General Electric’s Forward Dividend Yield Compares to Peers



General Electric’s forward dividend yield

A company’s forward dividend yield is calculated by dividing a year’s worth of expected future dividend payments by the stock’s present price. General Electric (GE) has the highest forward dividend yield in its peer group.

As the above graph shows, General Electric’s (GE) forward dividend yield is 3.3%, which is still way ahead of the industry average forward dividend yield of 2.3%. Even Siemens (SIEGY), which used to have a higher forward dividend compared to GE, has a forward dividend yield of 2.7%. Parker-Hannifin (PH) has the lowest dividend yield of 1.7%, immediately preceded by Illinois Tool Works (ITW) at 1.8%.

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Are GE’s operating cash flows a concern?

GE has some real concerns on the operating cash flow front in 2017. GE missed its cash flow estimates in 1Q17 by nearly $1.0 billion. Thus, investors should keep a close eye on this going forward.

CEO comments

Jeffery Immelt, GE’s CEO, said on the 1Q17 earnings call, “We’re off to a good start on organic growth and margins. The goals for industrial operating profit and structural cost-out are in sight. Despite a slow start, we plan to hit $12 billion to $14 billion of industrial CFOA for the year.”

Importantly, a few Wall Street analysts have predicted a possible dividend cut by GE in the coming quarters given dismal cash flow numbers after 1Q17 results. General Electric anticipates generating gross free cash flows that include proceeds from the asset sale of $16.0 billion–$20.0 billion in 2017.

Investing in ETFs

GE makes up 8.5% of the Industrial Select Sector SPDR Fund (XLI). The other industrial bigwigs included in XLI in the order of their holdings are 3M Company (MMM), Boeing (BA), and Honeywell International (HON).


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