GE’s third-quarter dividend
On September 7, US industrial conglomerate General Electric (GE) declared a quarterly cash dividend of $0.12 per share on its common stock outstanding. The dividend is payable October 25 to shareholders of record at the close of business on September 17. The ex-dividend date is September 14. The jet engine manufacturer has ~8.70 billion equity shares outstanding as of September 7. A dividend of $0.12 per share results in a cash outlay of $1.04 billion.
Past dividend history
This is GE’s third dividend announcement since cutting its dividend by 50% in November 2017. In May 2018, the company’s CEO John Flannery said that the dividend is ultimately a function of the company’s free cash flow. In the wake of the Industrial segment’s weak free cash flow, GE has been under severe pressure to maintain its dividend levels.
During the pre-John-Flannery era, GE raised its quarterly cash dividend to $0.22 per share in Q4 2016 to $0.24 per share in the third quarter of 2017. Jeff Immelt’s $0.02 dividend rise in the last year of his tenure was a huge surprise. Under Flannery, the company trimmed its yearly cash dividend to $0.48 per share from $0.96 per share earlier. In the last five years, GE’s dividend growth rate contracted substantially from double digits to low single digits and ultimately turned negative.
Peer’s dividend growth
In the last four quarters, General Electric’s key industrial (XLI) sector peer, Honeywell International (HON), has kept its quarterly cash dividend unchanged at $0.745 per share. HON increased its quarterly dividend by 12% in the fourth quarter of 2017 from $0.665 per share in Q3 2017. In the last five quarters, United Technologies (UTX) kept its dividend unchanged at $0.70 per share. In the third quarter of 2017, UTX raised it from $0.66 per share to $0.70 per share.
In the first quarter, 3M Company (MMM) raised its quarterly cash dividend by 16% to $1.36 per share from $1.175 in Q4 2017. In the third quarter, Illinois Tool Works (ITW) increased its quarterly cash dividend to $1.0 per share from $0.78 per share in the second quarter of 2018.
In the upcoming part of this series, we’ll look at GE’s free cash flow level.