Is General Electric Company (GE) a Buy?

Shareholder returns a priority once again

After slashing its dividend during the depths of the financial crisis, General Electric Company (NYSE:GE) has resumed its practice of returning substantial cash to shareholders. While investors likely remember the painful memories of GE cutting its dividend from $1.24 per share to $0.40 per share annually in 2009, it’s worth noting the company has increased its payout five times since then.

GE’s 3.2% dividend yield compares very favorably to United Technologies Corporation (NYSE:UTX) and The Boeing Company (NYSE:BA). GE currently yields 100 basis points more than its two competitors. For die-hard income investors, General Electric Company (NYSE:GE)’s dividend growth has to be considered encouraging enough to calm any fears of another downturn.

I’ve written critically of GE before based on its massive debt load, and unfortunately that story hasn’t changed. At the end of last year, GE had more than $236 billion in long-term debt.

As a shareholder, I’d be very concerned about this much debt, particularly if we are about to embark on an environment of rising interest rates. GE lost its coveted triple-A credit rating during the financial crisis and may see dramatically higher interest expense going forward if it cannot refinance its debt at low rates.

However, until proven otherwise, General Electric Company (NYSE:GE) looks to be back on solid financial footing. The company is reporting solid growth in sales and profits, and pays an attractive dividend, and as a result, appears to be a decent, if unspectacular, buy at these levels.

The article Is General Electric a Buy? originally appeared on Fool.com and is written by Robert Ciura.

Robert Ciura has no position in any stocks mentioned. The Motley Fool owns shares of General Electric Company (NYSE:GE). Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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