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By Jeremy Glaser | 04-16-2010 11:14 AM

GE Earnings Point to Dividend Raise

Morningstar analyst Daniel Holland believes GE will return capital produced by its stabilizing businesses and assets sales to shareholders rather than splurge on acquisitions.

Jeremy Glaser: For Morningstar, I'm Jeremy Glaser. General Electric reported first-quarter results that were roughly in line with our expectations. I'm here with analyst Daniel Holland to talk about the quarter, and to see what the future holds for GE. Daniel, thanks for joining me.

Daniel Holland: Thanks for having me, Jeremy.

Glaser: So anything in this quarter that stood out to you as particularly interesting?

Holland: I guess it's more the same drum beat that the company's had. Industrials still continues to plod along through the recession. Orders are starting to improve. Health care is improving, as well. And you start to see that Industrials is shaping itself up into a nice core infrastructure type company.

On the other side, the one thing that interests me, is that GE Capital posted a pretax profit for the quarter. And it's the first time in a number of quarters that the segment's been able to do that. In addition, you're starting to see pretax, pre-provision incomes, starting to continue to move upwards, which is a really good sign given that the company's asset base is shrinking at the same time.

Glaser: So what's that mean for profitability?

Holland: Profitability for GE Capital is going up. You're starting to see lower provisions, which automatically just keeps pushing earnings back up for the segment. Eventually, it will help GE Capital maybe return its dividend to the parent company, probably by 2012 or so.

Glaser: So, looking forward to the rest of 2010, where do you see some of the opportunities for GE are?

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