What next

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.

image

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?

Good Luck,

Robert

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About dividenddreamer

Doing what I can to make the best of today and the most of tomorrow.
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7 Responses to What next

  1. DivHut says:

    Well, I have held GE for about seven years and plan to keep it for the foreseeable future. Now that GE has divested a lot of its financial exposure after spinning off SYF and unloaded its media and home appliance assets I feel that the core industrial giant coupled with many years of industrial order backlogs, will help see GE to a better financial future. Thanks for sharing.

    • I have been involved in energy companies and companies that are responsible for building the infrastructure needed to utilze that energy. The world we live in is growing ever more dependent on energy in the form of fossil fuels as well as alternative energy sources. One look at a major city at night and the need for this fuel is utterly apparent. The world is growing ever more connected and GE should be at the forefront of making those connections.

      Keep cranking,

      Robert

  2. GE is my largest holding by far but I made the bulk of my purchases after the dividend was cut and the stock price was squeezed. I do feel the company has a bright future but there seems to be so much animosity towards Immlet that is affecting the price. What are your thoughts on him and the fairly stagnant share price?

    • GE is my largest stake also. You know, It is always difficult to take over for someone else. Immelt was left with the company that was previously putting up big numbers and accelerating in many ways. However, GE Capital was driving more than its fair share of the results. With 9/11 and then the recession, GE experienced some major league hits. Most companies shrugged them off, but some did not make it. GE was offered help from Buffet and with the beleaguered industrials started to reinvent itself. With such a large company that is tied in so many ways to GE capital, it would be hard to just cut the finance sector off completely. Many companies and countries require extensive finance to buy the hugely expensive items GE sells. If the economy accelerates and global growth moves forward, GE should be in position to benefit from all the infrastructure purchases that need to be made. Without clean water, electricity, transportation, and healthcare improvements most countries will be left behind in the global push forward. GE should be able to gain foothold in many developing countries because of its massive size and ability to deliver product on time and budget. Hopefully, the stock will benefit eventually. I, myself, would like to see the stock price in the $50 range with a dividend at around $1.60-$1.75 in the next 5 years or so-if not sooner. One thing is for sure, the dividend has to increase just to get to par with the prerecession value. It better make haste and get there soon. Shareholders and future investors are almost but demanding that to happen.

      Keep cranking,

      Robert the DividendDreamer

    • As far as Immelt goes, he has had a tough job in front of him. It is easy for people standing on the sidelines to critisize his abilities, but he is well educated and well informed, and he is dealing with some major issues with one of the largest and most diverse corporations in the world. Only a select few people are even skilled enough to contemplate being in his position. And yet, there are only a few of those who would be able to take his place who would be able to make the correct decisions when so many moving parts are entwined together. John Madden might be able to help out. Maybe he can bring his chalk board and draw out the plan.

      Keep cranking,

      Robert the DividendDreamer

      • I’ve debated a bit about buying a lot more GE in hopes of picking up the dividend. Since the stock is mostly sideways, using DRIP should allow the compound effect to move along well. What do you think?

      • Well, I am buying GE in the reinvestment of dividends all the time along with a few others. I have a bit of cash that I am giving serious thought as to what to buy. I know that GE I’ll be raising the dividend soon. If the price drops in the next few weeks before I buy something else, I might go GE direction, but I own a good bit of shares now, so if the price drops a lot, I will take a huge bite out of my Net Worth. Howver, if that stock happens to take off at all, I will see a move up in my Net Worth. It is a quandary for sure.

        Keep cranking,

        Robert the DividendDreamer

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