General Electric Co (NYSE:GE) will keep its focus on boosting its dividend and improving margins as it faces what Chief Executive Jeff Immelt expects to be an extended period of economic instability.
"We live in what most business commentators call a volatile world. I would argue that when the environment is continuously unstable, it is no longer volatile. Rather, we have entered a new economic era," the head of the largest U.S. conglomerate said in his annual letter to shareholders. "It could remain this way for a long time."
In the face of that forecast, the world's largest maker of jet engines and electric turbines aims to cut its costs -- and to reverse a trend of outsourcing manufacturing operations in order to run its factories more efficiently.
GE has a "dedicated focus" on raising its quarterly dividend, which currently stands at 17 cents per share -- and expects to have about $30 billion in available cash to put towards that goal, as well as to provide a cushion against economic shocks, over the next few years, said Immelt, who has run the Fairfield, Connecticut-based company since 2001.
"We have a dedicated focus on increasing the GE dividend in line with future earnings," said Immelt. He reiterated GE's focus on smallish takeovers, defined as targets worth $1 billion to $3 billion.
"Don't look for any big deals in 2012," the 56-year-old CEO said.
The company has one of the highest dividend yields in the blue-chip Dow Jones industrial average <.DJI>, above its industrial peers United Technologies Corp <UTX.N> and Caterpillar Inc <CAT.N>.
He confirmed GE's goal of growing industrial revenue -- a measure that excludes the GE Capital business it is still pruning -- by 5 to 10 percent this year, factoring out currency fluctuations and any acquisitions.
GE shares slipped 3 percent in 2011, while the Standard & Poor's 500 index <.SPX> closed the year flat.
The company's lagging share price is shareholders' main criticism of Immelt's tenure. The CEO noted that macroeconomic unrest, ranging from Europe's debt crisis to the shaky U.S. recovery, as well as worries about the company's large financial services arm, has left investors wary.
"Despite our growth, it was tough for GE to break away from investor concerns," said Immelt, whose company reported 16 percent profit growth last year.