Why I’m Buying Shares Of GE

by Joseph · 1 comment

in Investing

I don’t often disclose any of my investment decisions here on Debit versus Credit. With that being said I would like to disclose that I have made a small purchase of shares in GE. I wish I could make a larger investment (at least 100 shares), but at this point I’m in no position to do so. What I did do is buy 20 shares of GE at 11.76 a share. I already owned 10 shares in GE, but at the prices that it’s at right now I just couldn’t refuse to pick up a little bit more.

Let me tell you what made me go ahead and bite the dust.

GE at it’s current price ($11.81) is offering a dividend of $1.24 per share, with a yield of almost 10% (9.8% to be more precise). While the stock market may not be going higher anytime soon, and in fact could end up even lower than the point it’s at now, I’m not really worried about my shares in GE because for now I’m earning a 9.8% return on my investment. I’m also not worried because I’m in this for the long haul and have no plans whatsoever to sell this investment for at least 5 years.

Here’s what could go wrong.

GE could slash their dividends. This would effectively undermine part of the reason that I even bought the stock in the first place. While I do appreciate GE as a company and believe their stock price will be much higher in five years than it is today that doesn’t mean that I am not worried about their dividend being cut. However they seem to be in pretty good shape financially and based on my limited experience I’m making a bet that their divided won’t be cut. I should note that I’m not expecting it to be raised either.

Assuming that the dividend on GE isn’t cut I should be making a cool $24.80 a year on my initial investment of $235.60. You won’t find that kind of return at a bank.

{ 1 comment… read it below or add one }

AmeriGlide February 11, 2009 at 1:12 pm

I have been contemplating buying some stock as well. I rationalize a dividend cut, like you mentioned, by taking into account that the stock is already at a low. Assuming the stocks eventually go back up, a drop would not be the end of the world, but would mean I bought them just a little bit too soon…


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