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Dividend Income Stocks: GE (?)
Old 07-08-2009, 08:25 AM   #1
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Dividend Income Stocks: GE (?)

I'm hoping to get everyone's opinion on GE's long term potential. Will it drastically go up or down? Or will it's price just flow with the overall market? As a young (26 m) dividend income investor I am trying to decide if GE would be a good buy at some point (somewhere below $10 yielding above 4%). For those of you out there that has stuck with GE: why have you? If so are you buying more? For those of you looking for LONG term growth and eventually an annual dividend increase, would you consider GE if the price crashes again?

Personally I don’t believe GE's stock will show any significant gains or dividend increases in the next 5 years or so. But I wonder if you all think that it could be a good stock to buy while it’s down and potentially hold for 30+ years.

If I do decide to purchase it I would hold it in my Roth with my other long term dividend income stocks with DRIP (KO, PEP, JNJ, MMM, MO, PM, GIS, DUK, SO, KFT, BP, PAYX, WMT, MSFT, and T).

I know there are certainly better stocks to own out there (others that I'm looking at are ABT, MCD, D, COP, EMR, SYY, BMY, INTC, UL). What I end up adding depends on what my buy price would be for each stock. And again, all of these and what I own are in a Roth that I won't touch for at least 35 yrs. So should I add GE to this list or not!?

Also, are there some of you who invest like me that have another dividend income stock that I should consider at the right buy price?

Thank you FIRE community.

KYBEC29
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Old 07-08-2009, 08:42 AM   #2
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I presently have positions in approx. 25 dividend paying stocks. Many of these I have held for years. I recently began new positions in: AEP (yield 5.8%), CAT (yield 5.1%), FTE (yield 4.8%), GE (yield 3.4%), JNJ (yield 3.5%), LLTC (yield 3.8%), PG (yield 3.4%), and VZ (yield 6.0%). I will continue to buy in small increments on days when the prices fall until I establish a position similar to my other holdings.

I identified these as potential buys using Morningstar's screening tool. Of course, do your own due diligence.

My other stocks are: AWR, WTR, D, RRD, DOW, KFT, POM, PFE, MO, PM, RPM, SLE, SO, SGC, WRE, and a closed end fund: JPG. I am not currently adding to any of those other than reinvesting the dividends (my brokerage does this for free). I was able to pick many of these up at attractive prices. My overall current yield on the entire portfolio is 5.48%.
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Old 07-31-2009, 10:00 AM   #3
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Who is buying GE and why?
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Old 07-31-2009, 10:52 AM   #4
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Kybec,

You really are doing well with what you have, I wouldn't add anything else w/o selling a position. IMO, you are at a point where you have sufficient diversification and its a manageable #. I like GE. I like it for its infrastructure and alternative energy play. Also, recurring maint/services contracts. While the Finance Arm is ill, price will be depressed IMO.

Jim
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Old 07-31-2009, 11:55 AM   #5
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What do I know about GE? Not much. But hey, it's the internet so here goes my opinion.
In MBA school in year 2000, GE was thought to be a financial company that does manufacturing. This means that they are very skilled at [-]fudging manipulating adjusting the numbers in their SEC required reports. Clever lads like that could have bought into the toxic mortgage thing big time.
Growth in recent decades has been fueled by acquisition IMHO.
In recent history, they lost big time in the nuclear industry. The NRC has licensed Westinghouse's design for all of the new reactors that are starting in the US. They have issues with GE reactor design still. Westinghouse has orders for 100 (!) reactors for China.
Then there is the whole mortgage your future borrowing at 10% from Berkshire Hathaway thing.
GE is huge and they do many things well that I have not mentioned. However, the fact that they are considering not making light bulbs any more is an indicator to me that management has lost it's way.

One thumbs down from me.

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Old 07-31-2009, 11:59 AM   #6
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I may buy a little more GE, but most likely not as I already have as much as my allocation is designed for (about 7% of my portfolio).
I think it is an excellent long term buy, but I think there are many other excellent long term buys as well (many of which you listed).
PG (at about 3% yield) and LLY (north of 5.5%) are another pair of nice options.
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Old 07-31-2009, 02:52 PM   #7
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Sam Nunn says buy!

Seriously, it's a complicated question. But keep the position at 5-10% is my guess. Don't forget that you'll pay tax on those dividends.
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Old 07-31-2009, 03:33 PM   #8
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Quote:
Originally Posted by target2019 View Post
Sam Nunn says buy!

Seriously, it's a complicated question. But keep the position at 5-10% is my guess. Don't forget that you'll pay tax on those dividends.
There are no annual taxes in a ROTH IRA.

I do not like GE as a dividend stock as they are not comitted to their dividend. A dividend stock I do like is NST a little electric utility in the Northeast. Consistently have met inflation rate with their dividend increases and conservatively run.

Many of the other dividend stocks do not have so favorable yields as earlier in the year and their financial results are worse. Others I hold are PG, KO, ETP, MCD, JNJ
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Old 08-01-2009, 07:40 AM   #9
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I'm a big fan of the energy play. There are a lot of nice high yielding ones out there that I have been watching. NST and ETP are new ones for me. A quick look at both shows me that ETP's dividend at the current yield is unsustainable at current EPS, but a lot has to do with future prices and volumes over the next year.

Two that I have been watching are PSEC (Prospect Capital Corp (PSEC)) and PWE (a CanRoy). I have yet to purchase any of these yet and am always looking for good plays that increase their payout yearly.
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Old 08-02-2009, 10:15 AM   #10
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There are no annual taxes in a ROTH IRA.
Somehow I missed that mention in the OP. Thanks for clarifying.
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Old 08-02-2009, 10:20 AM   #11
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I do not know GE very well at all. However, I am acquainted with their water treatment business. In my opinion, they waste their money buying small companies that will never have large margins, while the corporation has unrealistic expectations for them. Usually, they maintain said companies for a couple of years, then shut them down.

Another point is that it is very difficult to make contact with them to order things, buy parts (for such major items as big turbines) or simply to find out something technical. Their web site for such things is impenetrable. Their on-line contact management process drives away customers, even established customers.

In my opinion, they are over-managed and have lost their way. They have a long way to fall, but they are doing their best to do so.

However, when confronted with a sad-sack company, Andrew Tobias once asked, Is there no price at which you would buy this company? I do not know what that price is for GE, but I don't think we have got there yet.

I am dividend-oriented these days and I don't know where they are going to get their dividends.
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