General Electric Dividends May Add Portfolio Power

Posted on Posted in Equity Markets

ge-logo-retroGeneral Electric (GE) broke out today and made a new high. The price trend is bullish for daily, weekly and monthly time-frames. Of course, I prefer to buy stocks based upon solid fundamentals. However, when I do, I also prefer to not fight the tape. Conventional wisdom advocates that one buy low and sell high, which is something I prefer as much as possible. However, there is nothing wrong with buying high and selling higher, especially if one’s investment horizon is long-term.

 

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Then again, when one considers the long-term benefits of a owning a consistent grower and payer of dividends, then perhaps anytime is a good time to buy. General Electric is such a candidate as it has averaged almost 16% annual dividend growth for the past 5 years. Assuming that it will maintain this growth for the next 5 years and perhaps maintain an average growth rate of 10% thereafter for another 5 years, it makes for a good core holding in one’s portfolio over a 7-10 year period. Compounding dividend growth can power any portfolio if one is patient and has the time.

 

GE Cost Basis Dividend Growth Rate 5 Yrs Dividend Yield Dividend
Year 1 30.12 15.95% 3.05% $0.92
Year 2 30.12 15.95% 3.54% $1.07
Year 3 30.12 15.95% 4.11% $1.24
Year 4 30.12 15.95% 4.76% $1.43
Year 5 30.12 15.95% 5.52% $1.66
Year 6 30.12 10.00% 6.07% $1.83
Year 7 30.12 10.00% 6.68% $2.01
Year 8 30.12 10.00% 7.35% $2.21
Year 9 30.12 10.00% 8.08% $2.43
Year 10 30.12 10.00% 8.89% $2.68

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