08-14-2014, 12:51 AM
(This post was last modified: 08-14-2014, 02:39 PM by Dividend Watcher.)
Good question, RamenTrader.
Now it depends on what you mean the price is quite high.
The last 4 quarters GAAP reported EPS is $1.61 and GE closed today at $25.83 giving a P/E of 16. Using those numbers, the payout ratio is 55%.
Using the last 4 years year-end EPS numbers, EPS has grown at an average rate of 9% and the CAGR earnings growth is at 9%. Yahoo estimates 7% growth over the next 5 years as does S&P and FinViz.
GE is slowly getting rid of the consumer finance division and I expect a lot of the commercial stuff will go away too except that which is used to service its industrial customers. They're also looking to sell the consumer appliances division. Because of that, the next few years may be more volatile for earnings until they get closer to management's (Immelt's ?) vision of the company for the future.
P/B is around 2 but the PEG is a little over 2, a little high for me but that's what you get in this market.
Morningstar gives it 4 stars with a fair value right around $29.
I'm expecting dividend growth in the 5% range going forward unless they're adamant about upping the payout ratio. I'd prefer they pay down some of the debt first but I don't make those decisions. You may want to look at EMR, HON, UTX or MMM also but GE beats them all in dividend yield. If you can be patient, then maybe GE is a buy for you.
Now it depends on what you mean the price is quite high.
The last 4 quarters GAAP reported EPS is $1.61 and GE closed today at $25.83 giving a P/E of 16. Using those numbers, the payout ratio is 55%.
Using the last 4 years year-end EPS numbers, EPS has grown at an average rate of 9% and the CAGR earnings growth is at 9%. Yahoo estimates 7% growth over the next 5 years as does S&P and FinViz.
GE is slowly getting rid of the consumer finance division and I expect a lot of the commercial stuff will go away too except that which is used to service its industrial customers. They're also looking to sell the consumer appliances division. Because of that, the next few years may be more volatile for earnings until they get closer to management's (Immelt's ?) vision of the company for the future.
P/B is around 2 but the PEG is a little over 2, a little high for me but that's what you get in this market.
Morningstar gives it 4 stars with a fair value right around $29.
I'm expecting dividend growth in the 5% range going forward unless they're adamant about upping the payout ratio. I'd prefer they pay down some of the debt first but I don't make those decisions. You may want to look at EMR, HON, UTX or MMM also but GE beats them all in dividend yield. If you can be patient, then maybe GE is a buy for you.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan