clifp
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Oct 27, 2006
- Messages
- 7,733
More M* stuff on GE
Back in Jan when GE was selling for around $34-5, I sold Jun 32.50 puts for $1.50. When it hit $38 a few days ago I figured I'd never get a chance to own it.
Clearly this isn't a home run stock (baring another crazy ass bubble) but %3.87 yield and more than a century of raising dividends at rate considerable above inflation, this is pretty much the classic buy and hold at this price.
I can understand why GE's short-term holders are dumping with such speed: This is a company that, whatever its other shortcomings, almost never disappoints the Street. But I never forget that as a shareholder, I'm paying for dividends, not earnings (much less earnings estimates). So I offer a few points for those interested in GE to consider:
* Uninterrupted dividend payments since 1899. Two world wars, the Great Depression, the Great Inflation, 18 different presidents--and GE shareholders always got paid.
* Dividend growth averaging 8.9% annually since 1951. For comparison, Consumer Price Index inflation ran at an average of 3.8% per year; nominal U.S. gross domestic product at 6.8%.
* Dividend increases every year since 1976. From 1975 through 2007, the dividend rate rose at 11.7% on average.
* GE stock, which closed today at a yield of 3.87%, hasn't been this cheap relative to its current dividend since 1985 (that is, back when 10-year Treasury bonds offered yields of 10% or more).
Back in Jan when GE was selling for around $34-5, I sold Jun 32.50 puts for $1.50. When it hit $38 a few days ago I figured I'd never get a chance to own it.
Clearly this isn't a home run stock (baring another crazy ass bubble) but %3.87 yield and more than a century of raising dividends at rate considerable above inflation, this is pretty much the classic buy and hold at this price.