DECEMBER 10, 2010, 2:41 P.M. ET.

GE Raises Dividend 17%, Honeywell Follows Suit

By Bob Sechler
Of DOW JONES NEWSWIRES

General Electric Co. (GE) said Friday that it will raise its quarterly dividend by about 17% to 14 cents a share, leading a broader move toward higher payouts by U.S. industrial groups now flush with cash.

The second raise by GE this year still leaves the payout at less than half the level when GE made its historic dividend cut in February 2009 at a time when heavy losses at its finance arm weighed heavily on the U.S. conglomerate.

The move comes ahead of the company's annual outlook meeting next week and follows the improved performance by its core industrial business and the GE Capital finance arm, which plans to start repaying a dividend to its parent from 2012.

GE shares climbed following the announcement and were recently up 4.2% at $17.84, their highest level since May.

Honeywell Inc. (HON), followed GE later Friday by announcing plans to raise its first-quarter dividend by 10%. The diversified industrial group's board authorized the increase to $1.33 a share from $1.21. Its shares were recently up 1.5% at $52.11.

The combination of improving demand conditions and restructuring efforts have left U.S. and European industrial companies sitting on a growing cash pile that has spurred merger-and-acquisition activity.

GE Chairman and CEO Jeff Immelt said in October that GE would consider a another dividend raise "if we don't see good opportunities" for acquisitions."

Immelt didn't rule out more deal-making despite the latest rise, and in a statement said GE "plans to continue capitalizing on complementary and financially attractive inorganic growth opportunities," as well as engage in "opportunistic" share buybacks and invest in research and development.

GE's latest dividend increase will cost it some $215 million a quarter. The conglomerate said early in the fall that it had the firepower to spend "$30 billionish" on acquisitions over the next two to three years.

Immelt said the payout increase reflected strong cash generation, the recovery at GE Capital, and "solid underlying performance in our industrial businesses through year-end 2010."

GE said in July it would raise the payout 20%, from 10 cents a share. This compares with the 31-cent dividend at the time of the February 2009 cut.

Immelt is scheduled to deliver his annual outlook to investors Tuesday from the "Saturday Night Live" stage in New York's Rockefeller Center.

GE reported in October that its third-quarter profit dropped 18% on impacts from selling its Japan consumer-finance business, although equipment orders rose 9%.

It also has been refocusing, reducing its stake in the NBC Universal media business, shrinking GE Capital and agreeing to buy energy infrastructure company Dresser Inc. for $3 billion.

-By Bob Sechler, Dow Jones Newswires; 512-258-1690; bob.sechler@dowjones.com

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