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The S&P 500 and its tracking exchange traded fund, SPDR S&P 500 Trust ETF (NYSEARCA:SPY), has rallied nearly 20% from the market lows of last year, and stocks such as Apple are up over 30% this year alone, but the recent sell-off has been brutal.

The S&P 500 and Nasdaq have held up fairly well during the recent sell-off, declining about 5%-6%. Still, cyclical sectors such as energy, the industrials, and the financials, have sold-off hard. Market leaders such as Exxon Mobil (NYSE:XOM), General Electric Company (NYSE:GE), Caterpillar (NYSE:CAT), and Citigroup (NYSE:C), have been particularly weak as well.

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While Apple (NASDAQ:AAPL) is by far the most talked about stock in the market, General Electric has consistently been one of the most covered industrials in the market for some time.

General Electric used to be the biggest company in the world, but this nearly $220-billion-dollar industrial leader has changed its business model several times over the last decades. A leading industrial and financial stock in the nineties and recent years, General Electric has continued to refocus its business model on its industrial businesses over the past couple of years.

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General Electric has faced a lot of headwinds over the past several years. While the company's strong financial exposure enabled General Electric to lever up during the housing bubble, GE financial has weighed heavily on the company's earnings during the recent recovery. General Electric generated as much as 60% of its overall earnings from its financial division, and the company's appliance businesses were heavily levered to the U.S. housing sector as well.

This is why I find it so interesting that General Electric's recent earnings report showed the continued trend of the company's efforts to refocus its business on core industrial division. General Electric's revenues from GE financial are less than 35% of total revenue today.

While GE Capital consistently generated more than 50% of the company's revenue during the years of the housing bubble, GE Capital has consistently underperformed the company's industrial divisions for some time. General Electric's infrastructure, aviation, and other industrial businesses grew at the fastest pace since the 2008 crisis, but the company still showed just a mid-single digit overall revenue growth rate for the year.

Today, General Electric is fairly balanced between the financial and industrial businesses, which is why the company was eligible to receive funds from TAARP during the financial crisis.

While the company's financial division has weighed on its near profits for several years, the strength in General Electric's industrial divisions has stabilized the company, enabled management to consistently payout over 40% of the company's earnings, and keep the company's credit rating at investment grade. General Electric's share price has also outperformed most of the financials by a fairly wide margin during the last three years.

General Electric's industrial divisions have showed consistent mid-single digit growth over the last three years, and GE's infrastructure, health care, and transportation divisions, all showed double digit growth.

General Electric's industrial divisions have showed consistent mid-single digit growth over the last three years, and GE's infrastructure, health care, and transportation divisions, all showed double-digit growth as well. General Electric's recent quarter was not only its best in over three years, it was also the company's 8th consecutive quarter of impressive revenue growth. General Electric also raised its dividend by over 13%, and the company's payout ratio is a conservative 45%.

While General Electric's businesses are obviously cyclical, the company's long-term contracts and necessary products and services have enabled its earnings to hold up well over the last several years. General Electric has benefited significantly from strong demand from companies with strong balance sheets and cheap capital. Many of the company's industrial segments, such as aviation and energy, also offer significant costs savings to companies even in a weak economic environment.

General Electric has finally focused its business model on its industrial divisions, and in addition to spinning off CNBC last year, the company plans to sell-off significant assets from GE Capital as well. General Electric has suffered for years from many of the excessive acquisitions Welch and previous CEOs made, and Immelt has been blamed for the poor recent performance of the stock, the company was likely moderately to significantly overvalued under Welch, who relied more on acquisitions than organic growth to grow earnings.

Today, Immelt has finally spun-off and focused the company's businesses aviation, transportation, health care, infrastructure, and other industrial areas, around its strength. General Electric's moves to spin-off much of GE cCapital will also likely benefit the company's credit rating and its ability operate without regulatory constraints that other financial firms will face from Dodd-Frank and the implementation of the new Basil Accords.

To conclude, while General Electric's overall revenue growth from 2011 to 2012 was around 6%, the company's industrial divisions grew on average in the low double-digit range over the last year, and the stock currently trades at around 10x-11x average estimates for next years likely earnings. If General Electric spins off most of GE Capital, the company should be able to increase its payout ratio to around 55%-60%, and grow the company's earnings by 12%-14%. If the economic recovery accelerates moderately, and GE can continue to grow its earnings at 12%-14% a year and pay out a higher percentage of its earnings, the company should be able to double its dividend and earnings in the next five years.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Why General Electric's Earnings And Dividend Should Double Within 5 Years