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Subject: GE Study - Revised
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Author Messages

Robert Brooker
Boston, Massachusetts


11/21/2008 9:26 AM  
I kept the 5% annual growth of earnings and revenue, but lowered the low PE to 6. It still shows a healthy annual return so I am adding to my position.

Attachment: GE.SSG


Patrick Landers


11/21/2008 11:52 AM  

Hey Robert,

Is there a way to tell if the dividend fo GE is relatively secure? The yield for this stock is currently around 9.5%. Can I look at Net Income, Cash Flow etc to get a feel for future dividends. I have considered buying stocks in the past for the yield, only to see the dividend cut or eliminated. (Although, if GE cut it's dividend in 1/2, the yield would still be 4.5% which is good in the current market.)

Pat Landers


Robert Brooker
Boston, Massachusetts


11/21/2008 3:49 PM  
Pat, I think in this environment that any dividend, including GE’s, is subject to cuts. I would rather suggest you evaluate GE based on what you think earnings growth and future PE would be, and then impute what a future stock price would be. GE Financial is certainly subject to ongoing risk. Their strategy of only being in markets where they can be the #1 or #2 player adds some stability and reduces some risk in my opinion.
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