GE dividend, asset sales in focus as earnings approach
GE to spin off health-care business, exit Baker Hughes investment
Investmark Advisory Group Principal Michael Lee on General Electric’s efforts to turn the company around.
General Electric is expected to book a weaker second-quarter profit, as the beleaguered industrial giant reports earnings Friday amid questions over its dividend.
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GE has said it will sell $20 billion in assets as part of an effort to cut costs and focus on core businesses. In June, GE announced that it will spin off its healthcare division into a separate company and sell its stake in Baker Hughes, the oilfield services firm that GE acquired in 2017.
The Boston-based company has also slashed its dividend and signaled a possible second cut after the healthcare spinoff is completed in 12 to 18 months. GE said it expects to “adjust” its payout to shareholders following the transaction, targeting a dividend that’s in line with other industrial companies.
As reported by FOX Business’ Charlie Gasparino in May, GE has explored the idea of cutting or eliminating its dividend amid the company’s struggles.
“GE expects to maintain its current quarterly dividend, subject to board approval, until GE Healthcare is established as an independent entity,” the company said in a news release in June. At that time, “the GE board expects to adjust the GE dividend with a target dividend policy in line with industrial peers.”
Investors and analysts had speculated that GE, which has paid a dividend for 119 years running, would be forced to make further cuts. In November, GE announced that it would reduce its dividend for the first time since the Great Depression. J.P. Morgan analyst Stephen Tusa has estimated that GE will cut its dividend by around 30%, according to CNBC. Goldman Sachs has said the most “prudent” move would be for GE to consider suspending its common dividend for 18 months, the investment bank wrote in a research note in June.
|GE||GENERAL ELECTRIC COMPANY||13.73||-0.02||-0.15%|
Wall Street analysts expect the maker of jet engines and light bulbs to report adjusted earnings of 18 cents per share for the quarter ended in June, compared to 28 cents in the same period last year. GE’s revenue is projected to hit $29.31 billion, which would reflect a slight decline from $29.56 billion.
GE shares ticked 0.15% lower to $13.71 on Thursday. The stock has slipped more than 21% since the start of the year.
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