Thursday, April 19, 2007

Dividend Growing Stocks - II

GE

I'm sure everyone knows who GE is but...for those of you who don't...they are a large multinational conglomerate who manufacture almost everything… from jet engines to power generation, financial services to plastics, and medical imaging to news and information.

-has paid a dividend every year since 1899.
-increased their dividend every year for the last 31 years.
-has grown their EPS each year for the past 10 years (2003 excluded)
-current yield of 3.2%
-5 Star rating by S&P
-trailing PE of 17.2
-2007 projected P/E: 16.33
-2008 projected P/E: 14.6
-Progressive company building for the future with their ecomagination concept.

All in all a great company and a great choice for those of you following a dividend growth strategy.

7 comments:

Hawler said...

Some financial analysts predict the Canadian dollar at par to the US in the not to distant future.
As a lot of the big dividend paying blue chips you profile are US companies, should the currency risk be a concern, or does the fact these are global companies eliminate most of the risk?

Middle Class Millionaire said...

As an individual investor I think there is very little gain in trying to either hedge currency (because of cost) or predict it (because no one can do it accurately). I think that instead it's important to limit the percent of your portfolio (based on risk) that's exposed to international currencies (as eventually you are going to be retired in CDN dollars). One of the general criteria I use when buying US securities is that a significant portion of their revenue (min 40%) come from outside the United States. This acts as a natural currency hedge as all foreign earnings have to be repatriated into American dollars.

advantage said...

I agree with you MCM.

I would go as far to say that currency risk should not cloud your mind away from just general 'country' or non diversification risk. For example try buying a company with the equivalent exposure to a JNJ,GE, or PG in Canada.

Currencies will swing both ways several times if you give them enough time to. No one can predict it, and why try to. You are putting yourself at a greater risk by only buying Canadian corp.'s and ignoring opportunities outside of our limited market.

Robert said...

A quick check of the chart show's that GE has gone sides ways for the past 3 years, does this bother you? Are you buying it as a pure dividend play? That is your buying it only for the dividends? Becuase your not retired I'm assuming you would reinvest the dividends.

Rob in Madrid

Middle Class Millionaire said...

You’re right Robert, GE has gone sideways for the past 3 years but I believe it was for good reason and does not worry me one bit. Although it has gone sideways it’s earnings and dividend have been increasing. It was simply a matter of the market realizing that GE should not be trading with the PE of a high growth company. On a fundamental basis it’s a better company than it was 3 years ago.

I also want to point out that I do not have a position in GE although it is one that I will probably buy in the future. I never buy anything as a “pure dividend” play. I have to believe in the long term prospects of the industry and company that pays the dividend. I also don’t reinvest the dividends from any company that I own (but don’t see a problem with doing so.) Here is a link to a post I’ve done on re-investing dividends or not.

http://middleclassmillionaire.blogspot.com/2007/03/re-investing-dividends.html

advantage said...

Personally I think GE is really cheap at these levels. Consider the following.

Earnings estimates:

2007 ~+12%
2008 ~+12%

P/E = 17 seems a little on the low side to me consdering their high ROE, great brand, fabulous mgmt, global reach, and environmental positioning. I believe the P/E should be more like 20.

GE is investing in higher growth areas of their business and geographically and getting out of lower growth areas.

Disclosure - I own some GE

QUALITY STOCKS UNDER 5 DOLLARS said...

Theirs lots of good dividend stocks.