Diversified conglomerate General Electric Co. (GE) Monday announced that its financial services unit GE Capital Corp. has approved $6.5 billion in dividends to parent GE in the year 2013. In addition, GE Capital plans $4.5 billion in special dividends to GE in the year, subject to approvals.
GE Capital is one of the five major units of GE and provides commercial lending and leasing, as well as a range of financial services for health care, media, communications, entertainment, consumers, real estate, and aviation.
According to GE, the earnings-dividend payments are planned at 30 percent of GE Capital's total earnings in 2013. GE Capital had paid the first-quarter earnings-dividend of $447 million to GE on April 19, 2013.
In the first quarter of 2013, GE Capital's earnings increased 9 percent, while ENI, excluding cash and equivalents declined 7 percent to $402 billion. The unit ended the quarter with $68 billion in cash, and its Tier 1 common ratio under Basel 1 improved by 65 basis points to 11.1 percent.
The company said the dividend payments are subject to approvals from GE Capital board and GE Board Risk Committee. The special dividend payments are also subject to the same approvals.
"This announcement is consistent with our goal to reduce the overall size of GE Capital and for it to return significant cash to GE," said GE Chairman and CEO Jeff Immelt.
In 2013, GE intends to return $18 billion cash to its shareholders, including repurchase of $10 billion of stock. According to the company, its capital allocation plan is aimed at long-term growth, maintain an attractive dividend pay-out and repurchase stock.
The Fairfield, Connecticut-based GE, which makes jet engines and turbines, on April 19, reported a higher first-quarter profit, reflecting mainly a gain from sale of its remaining equity stake in NBCUniversal joint venture. Revenues were flat with last year.
Earlier last month, GE agreed to acquire oil and gas equipment firm Lufkin Industries Inc. (LUFK) for about $3.3 billion. GE said the deal will help it to further expand its oil and gas' artificial lift capabilities beyond electric submersible pumps.
GE closed Friday's regular trading at $23.46 on the NYSE. In the pre-market activity, the shares are up 0.26 percent.
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