I have been a shareholder of GE for the last 15 years. It is my largest holding and it has been a rollercoaster ride for sure. I did a ton of research on the company over the years, but no amount of research prevented that dividend cut in 2009 even when GE promised not to make cuts. I would have been more than happy to have the stock price fall because of the increased ability to buy more shares with the dividends.
However, the dividend cut was another beast altogether. The plan to cut back on work and use the dividends to supplement income while remodeling the new rental properties was obliterated. So, with the help of my father and some really good luck, I purchased 4 properties and remodeled each one. I made up for that dividend cut by being very cost efficient and extremely brutal in my negotiation tactics on the prices of the properties. I chose properties with issues that the typical buyer would not be able to address. As long as the bones are there, the rest is just cosmetic. I see people buying houses that are in perfect shape only to tear out the whole interior because it is not quite how they want it. Not only is that costly and wasteful, but it is just plain crazy. I would never destroy something just because it is not how I like it. If it is neat and clean and functional, it can and will generate income-period. When you do all the work, it is amazing how much money is saved by not wasting materials and reusing lumber that is mostly better than what is purchased in the lumber yards today.
All through that time, GE has been refocusing and retooling the company. The dividend has been steadily increasing and according to Mr. Immelt, it will continue to increase for the forseeable future. I am looking for a 12 cent annual increase for the coming year. That may be optimistic, but 3 cents per quarter was what they gave last year, and the year over year increase would be less. The earnings should see improvements and the share count should be reduced. The Synchrony deal should be very lucrative and the Alstom deal should push earnings higher and help increase margins. With the sale of the appliance unit, money is just rolling around all over that company. I want my share. That 3 cent increase might not sound like much, but it will allow the dividend to break the $1.00 mark and that seems like it might be a possible kicker to get this stock rolling higher. A couple more yearly increases like that and the dividend would be back where it was before the cut. I can’t wait! I feel as if that day will be like the Prodigal Son coming home—- although I might not kill the fatted calf.
I have always heard that the markets can be cyclical. Well, GE was not part of the cycle that was this amazing run of the last Bull Market. Hopefully, it finds its way and regains the favor of investors. There is just something about those jet engines and turbines that just seems to make me believe in this company. The world is a very connected place and it is becoming more connected each day. GE is entrenched in those connections. Because GE is and will ultimately be responsible for building a vast amount of the future’s infrastructure, I find it hard to believe that GE will not see tremendous growth from exploiting those connections.
I guess I am an optimist. I see this glass (GE) as half full. I see a company on the cusp of a major upturn. 2014 has not seen any improvement in the stock price, but it has seen some good moves on the part of GE. Also, I have had the opportunity to add to my share count through dividend reinvestment at quite a nice discount. If the dividend increases to what I expect (3 cents per quarter), I would be extremely happy as to how the year went for GE.
We will see.
It is really something to see these turbines spinning up close in Sweetwater TX.
Anybody have any thoughts on GE and its potential dividend increase?