Linked here is a PDF copy of my detailed analysis of General Electric Company (GE) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: General Electric Company (GE) is a diversified industrial corporation.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description: 1.) Avg. High Yield Price, 2.) 20-Year DCF Price, 3.) Avg. P/E Price and 4.) Graham Number. Of the four valuations listed above, GE is only trading at a discount to 3.) Avg. P/E Price. If I exclude the high and low valuation, and average the remaining two valuations, GE is trading at a 32.8% premium. A Star is deducted due to the high premium.
Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description: 1.) Rolling 4-yr Div. > 15%, 2.) Dividend Growth Rate, 3.) Years of Div. Growth, 4.) 1-Yr. > 5-Yr Growth and 5.) Payout 15% of avg. GE only earned one Star in this section for 3.) above - it has grown dividends for at least 10 years.
Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description: 1.) NPV MMA Diff. and 2.) Years to >MMA. GE did not earn any Stars in this section. It will take 10 years before GE's dividend earnings are equal to that of a MMA earning 5.11%.
Other: GE has long been considered one of the best managed companies in the U.S.
Conclusion: GE earned no Stars in the Fair Value section, a net of zero Stars in the Dividend Analytical Data section and had no Stars in the Dividend Income vs. MMA section for a net total of Zero Stars, which rates it as a 0-Star Avoid stock. This looks like a pretty clear cut decision on what to do with this stock, at least it was for me. I added to my position in GE last week! I will explain why in the third post in this series.
Disclaimer: As always this is only my opinion and you should not rely on it. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.
Full Disclosure: At the time of this writing, I own shares of GE.
What are your thoughs on GE?
This post is the second in a three part series. [First Post]
Recent Stock Analyses:
- CVS Health Corporation: Trading Below Fair Value And Strong Dividend Growth
- Yum! Brands And 5 Other Stocks Just Gave Their Shareholders A Raise
Popular Posts - Last 7 days
Presented below are my dividend stock and ETF/CEF holdings. This is not a recommendation to buy these securities. I have classified some of...
Andy Warhol in 1968 said that "In the future, everyone will be world-famous for 15 minutes." In our society, many things follow th...
Each Sunday I highlight any notable articles that I came across over the past week, along with any Carnivals I participated in. For those re...
A pessimist might say life is a series of bad things happening, then we die. I certainty wouldn't go that far, but life often deals us u...
Linked here is a detailed quantitative analysis of Medtronic Inc. (MDT). Below are some highlights from the above linked analysis: Compan...
Monday, October 31, 2011 will mark my fourth full year of writing as Dividends4Life . It is hard to believe another year has passed. Like th...
Like many that came before me, I am on a journey to construct a portfolio that will provide me... Dividends 4 Life
Long considered the domain of “ widows and orphans ”, utilities have developed a somewhat stodgy reputation. Why are utilities considered...
The Broad Dividend Achievers™ Index is comprised of companies incorporated in the United States or its territories, trade on the NYSE, NASDA...
Over the last several years Dividend Stocks have become immensely popular. It seems that every financial adviser or financial publication is...