I am preparing a write-up on the new General Electric/Baker Hughes oil services colossus that will be publicly traded, but I was struck at how the significant reshuffling of the business is setting General Electric up for high single digit growth a few years down the road at the expense of lower dividend growth now.
The very first question we should ask ourselves as we analyze General Electric’s asset reshuffling decisions is this: Is it all necessary?
My view is that the answer is no.
At Synchrony right now, the profits are $2.1 billion. That profit is base is expected to grow to $3 billion in the next five years. Incidentally, this makes Synchrony one of the undervalued stocks in the market. Also, the sale of the $25 billion portfolio in commercial assets to Wells Fargo represented another $700 million in net profits