The reason I added today is purely due to the stock's current valuation...
- GE is trading at levels not seen since May of 2004; since then earnings and dividends have both been growing nicely
- Price/Earnings ratio is currently 14.1x
- Dividend Yield is 4.1%
- I can currently buy $1 of GE for about 99 cents Canadian
What Does My Chunk of GE Look Like?
- 127 shares - average cost of $37.64 Canadian
- Providing $161.29 per year in dividends
- My yield on cost is 3.4%, while the current yield is 4.1%
- I plan to hold on to these shares indefinitely, adding to the investment when the valuation is attractive
- The dividends will be collected and re-invested in GE or another stock of my choosing
- The dividends are not tax friendly, however you can't get GE's exposure in a Canadian dividend paying stock
Yes there have been, and will be short term issues with GE's earnings related to their large financial exposure. These short term problems are blessings in disguise for a long term dividend growth investor because they are providing an opportunity to pick up a company that has raised its dividend every year for the past 31 years while it's yielding over 4%. You could say the same thing about some U.S. and Canadian banks right now, however I believe GE's current and future earnings and dividend growth prospects look good relative to that of these banks. GE operates in many areas like domestic and emerging market infrastructure as well as alternative energy that should prove to be high growth businesses going forward. It's nice to add non-financial exposure to a dividend growth portfolio, when you are confident of future dividend growth from the starting point of a 4.1% yield.