“We believe [GE Capital] should continue to generate excess capital, even as it continues to pay 30 percent of its net income to the parent company in dividends, and see the distinct possibility of further special dividends from GECC to the parent over the next few years,” the report states.
Citigroup argued the payouts will lead to an ever-greater share of GE’s earnings coming from its industrial businesses, as opposed to its financial arm — a development that should lead investors to pay a higher multiple for General Electric shares.
Citigroup reiterated its “buy” recommendation on GE .
“There is no question that the dark days of the financial crisis and recession shook GE investor confidence. With those days thankfully behind the company and armed with lessons learned, we believe cold-eyed investors should be increasingly encouraged about the prospects for GE’s growth machine to get back on track,” the report states.
—By TheStreet.com’s Dan Freed
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