Investopedia: Conglomerates With A Dividend Angle

Conglomerates are not often the most popular companies on Wall Street. Most true conglomerates straddle many markets and lines of business, and that complicates life for analysts and investors. What's more, it is difficult to effectively allocate capital among businesses with very different dynamics, and that has led many conglomerates to underperform in the past. As a result of all this and more, many of these stocks historically carry a so-called "conglomerate discount," a discount to fair value that implies it is worse for shareholders for a company to do many things at once. 


All of that said, there are exceptions to every rule. Some conglomerates allocate capital very effectively and use their portfolio of businesses to tamp down cyclicality and to channel cash flow from mature industries into new growth industries. Moreover, many of these conglomerates generate substantial cash flow and pay healthy dividends.
That makes some of these names worth a look for income-oriented investors.

General Electric - The Return of the King? 
General Electric (NYSE:GE) used to be a no-brainer on any list of top-notch dividend stocks and any writer questioning its quality was usually shouted down quickly. Well, then along came the credit crisis and GE Finance turned from superstar to albatross. Nevertheless, GE still has a very attractive portfolio of companies and a solid dividend. While the company will still need time to regain its prior composure, higher returns on capital and better payouts seem likely in the years to come. 



To read the full piece, click below:
http://stocks.investopedia.com/stock-analysis/2011/Conglomerates-With-A-Dividend-Angle-GE-JNJ-PHG-SI-DD0606.aspx