Back in March, long-standing blue chip company General Electric (GE) spun-off and merged its energy businesses (formerly GE Power, GE Digital, and GE Renewable Energy) into GE Veranova (GEV). Since the spin-off on March 27, GEV is the second best performing stock in the S&P 500 with a 161.9% gain.  That is second only to the near-200% gain in shares of Palantir (PLTR) in that same span and compares to a 15.76% gain for the S&P 500.  Meanwhile, parent company General Electric (GE) has slightly outperformed the S&P 500 with a 16.5% gain while another one of its semi-recent spin-offs (occurring in January of last year), GE HealthCare Technologies (GEHC), is down double-digits.

The S&P U.S. Spin-Off Index measures the performance of companies that have a market cap of at least $1 billion and have been spun-off of a parent within the past four years. In the chart below, we show the return of this index versus the S&P 500 over the past decade.  As shown, spin-offs have offered respectable returns albeit coming up short of that of the S&P 500. On a relative strength basis, spin-offs were actually outperforming the broader market throughout 2014 into 2017, but the trend has shifted out of favor in the past several years. With that being said, the recent strong run in GEV among others has meant that the relative strength line has made a considerable pivot higher in recent months.

Of course, in being one of the best performing S&P 500 stocks this year, GEV also leads in performance since the spring among other spin-offs.  In the table below, we show the members of the spin-off index in addition to when they were spun-off, their performance since GEV's spin-off, and their dividend yields.  The only one of these companies holding a candle to GEV has been Victoria's Secret (VSCO) which has also more than doubled since the spring.  Conversely, there are ten that have fallen in that span.

In addition to its big rally, GEV is also worth mentioning because in a press release earlier this week the stock instated a dividend and announced a buyback.  Among the aforementioned spin-off stocks, about half pay a dividend and GEV's new dividend yield of just 0.3% is at the lower end of these names.  The $0.25 payout goes ex-dividend on December 19 with it planned to be paid out in late January.

Switching over to the parent company, General Electric (GE) is an interesting story with a dividend history worth mentioning. Currently, GE has the 14th lowest dividend yield among dividend payers in the S&P 500 Industrials sector.  While the sector itself doesn't have a particularly large yield, almost half (45%) of its member stocks have a larger yield than the S&P 500.  For GE, the company had an impressive 32 year run of raising its dividend annually from 1977 through 2009. However, hard times during the Financial Crisis resulted in that dividend to get slashed. The 2010s saw the company undergo significant restructurings which have clearly continued into today. Those culminated in another big cut in the dividend in 2017 and 2018. After the continued restructurings, in the current iteration, General Electric is focused primarily on the aerospace business. While the stock's price has rebounded (currently it is around some of the highest levels since 2008), the dividend yield is a shell of its former self. With that being said, GE raised its dividend by 20 cents in the first quarter of the year, marking the first time GE raised its dividend since 2016.

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