General Electric Co. said it raised its stock buyback program by $4 billion, to $17 billion, and boosted its dividend 15 percent, signaling confidence to investors increasingly worried about slowing corporate profits.
The Fairfield, Conn.-based conglomerate also adopted a program to let owners of GE shares buy stock directly from the company and avoid brokerage fees.
GE’s moves came as the U.S. stock market was falling and is reminiscent of International Business Machines Corp.’s move in October to buy back shares the day after the biggest one-day drop ever in the Dow Jones industrial average.
“In a difficult, choppy market, you may be willing to pay a little more for the confidence and reliability that you get from GE,” said Bud Duffy, an analyst at STI Capital Management, an Orlando-based firm, which owned about 10.4 million shares at the end of September.
GE, the biggest company in America as measured by its market capitalization of more than $237 billion, has had an ambitious stock buyback plan since December 1994, purchasing $9.4 billion, or 243 million shares, during that time.
GE said it has extended the buyback through 1999. The direct-purchase program starts June 1, and requires a minimum investment of $250 and allows a maximum purchase of $10,000 a week.
While many large companies have adopted direct stock purchase plans, GE added a one-time fee for the service, giving it a new source of revenue. Users will pay an initial $7.50 enrollment fee, GE said.
GE’s shares fell $1 to $73 on the New York Stock Exchange, after dropping as low as $70.94 before the stock buyback was announced.
