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A Foolish Baby Shower: General Electric

I've been a parent three times. My two boys and little girl are precious to me. As such, I'm not one to place their future well-being in the hands of just anyone. Fortunately, General Electric (NYSE: GE  ) CEO Jeffrey Immelt isn't just anyone. He's been one of the top-performing chief executives in the country since landing the top spot in 2001, and I believe he'll continue to impress for the next 18 years. Here's why.

He'll keep the kitchen stocked in both good times and bad
First, General Electric has a history of boosting dividends. Check out its per-share payouts since 2002:


Dividend Per Share









2006 (est.)


*Data provided by Value Line

Look closely, and you'll see that management has been accelerating its dividend increases. For example, from 2002 to 2003, the payout jumped only 5.5%. But from last year to this year, the General is boosting its dividend by nearly 14%. Nice.

Of course, GE can afford this abundance for investors. The company has grown its cash flow from operations by double digits in three of the past five years, including a very healthy 10.7% during 2005.

He's focused on keeping you comfortable
And the company is expected to get even stronger. GE has arranged to sell its underperforming insurance business for $8.5 billion. As a result, the Street has the firm generating double-digit earnings growth all the way out to 2008.

What happens beyond then is anyone's guess, but it's worth noting that GE's corporate philosophy is very much in line with shareholder interests. For example, the company seeks to lead every business in which it participates. If it can't, it moves on. That's an exceedingly shareholder-friendly philosophy, because it ensures that capital is applied in the most effective way possible. And that may be why Fortune ranked GE its "Most Admired" company for 2006, an honor GE has received six times in the past decade.

He's a committed custodian
But there's even more to like about Immelt and GE. Like, say, Immelt's portfolio. As of last month, he directly owned more than 800,000 shares. That may not sound like much for a company with more than 10 billion shares outstanding, but it's worth noting that Immelt has purchased more than 130,000 shares in the last year alone.

The Foolish bottom line
In his newest book, The Future for Investors, Jeremy Siegel proved that boring stocks that pay dividends often prove to be market-beaters. Few have a better track record on that score than the General, and fewer still boast the kind of ownership interest that Immelt does. Combine them, and you have the makings of a superior stock, buttressed by the fundamentals of a superior company. Why trust your children's future to anything less?

A joyful abundance of Foolishness awaits your little tyke. Click here to see what other financial gifts are in our Foolish baby shower basket for your littlest loved ones.

Interested in other great dividend-paying stocks? Take Motley Fool Income Investor for a 30-day free spin.

Fool contributorTim Beyersdidn't owns shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking his Foolprofile. The Motley Fool has an ironcladdisclosure policy.

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