SOURCE: The Bedford Report

The Bedford Report

October 27, 2011 08:16 ET

Margin Squeezes at General Electric and 3M Prevent Dividend Growth

The Bedford Report Provides Equity Research on General Electric and 3M

NEW YORK, NY--(Marketwire - Oct 27, 2011) - This earnings season conglomerates General Electric and 3M failed to impress investors, as the economic slowdown began to weigh on margins. With profits struggling, shareholder return in the form of dividends remains much lower than in 2007 at GE and 3M. The Bedford Report examines the outlook for companies in the Conglomerates Industry and provides equity research on General Electric Co. (NYSE: GE) & 3M Co. (NYSE: MMM). Access to the full company reports can be found at:

Last week General Electric reported earnings that met Wall Street expectations, but its shares slipped as investors worried about declining profit margins at its energy equipment division. The decline -- to a rate of 13.7 percent from 16.5 percent a year earlier -- reflected weak demand for electric turbines holding down selling prices at the largest U.S. conglomerate's biggest industrial unit.

General Electric's dividend remained unchanged -- the second consecutive quarter the company failed to boost its dividend. In the long-term, the company's Chairman and Chief Executive Jeff Immelt says the company aims to eventually return to its pre-recession tradition of predictable, annual increases in dividends.

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Earlier this week 3M reported third quarter earnings that fell well short of expectations due to weakness in the electronics market and inventory-reduction moves by its customers. 3M reported third-quarter net income attributable to common shareholders of $1.09 billion, or $1.52 per share, down from $1.1 billion, or $1.53 per share, a year earlier. 3M forecast full-year 2011 earnings of $5.85 to $5.95 per share. It previously forecast $6.10 to $6.25.

Naturally, 3M did not announce any dividend increase during the disappointing earnings announcement. Presently the company pays an annual dividend of $2.20 for a yield of around 2.7 percent.

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