Dog of the Dow #5, General Electric (GE)

Feb 162012

The #5 dog of the dow for 2012 is General Electric, (Ticker symbol GE). General Electric is the 6^th largest company in the United States, and is a 200 billion dollar cap company; General Electric was founded in Schenectady New York. GE is a very old company, established back in 1892. GE is currently split up in four segments, Technology Infrastructure, Energy, Capital Finance and Consumer & Industrial.

In 1896, GE was one of the original 12 companies to be listed on the newly founded Dow Jones Industrial Exchange. It is the only one that remains today from the original 12.

GE went through a 20 year period of exceptional growth, where the stock value went from 1 dollar a share (split adjusted) in 1980, to a high of 59.88 in August of 2000. However after 2000, GE has experienced a significant drop in their stock value. Over the next two and a half years, GE lost over half of their value, as the stock fell in the 22 dollar range, during the 2003 recession.

GE once again came back, experiencing strong growth into 2008, with share prices going over 40 dollars a share. A solid dividend of 31 cents a quarter made it a strong stock during this period. Then 2009 happened, and the stock fell all the way to 7.06 a share. GE had to change course of their company.

During 2009, GE cut back their dividend from 31 cents a quarter to 10 cents a quarter. GE has come back from 7.06 a share to just over 19 dollars a share today. The dividend has also been increased, though not back to levels in 2008. The current quarterly dividend is 17 cents a share. Its current dividend yield is 3.6%. However, I would believe that GE will probably boost their dividend once again in 2012, working it back towards the levels we seen in 2008.

GE earnings were $1.24 a share for 2010, and were just reported at $1.37 for 2011 and projected to be $1.56 for 2012 and $1.75 for 2013. This is a company that is continuing to grow, even though it’s already huge. All of this equates to an average P/E ratio of about 15. Forward PE for 2012 is looking closer to 12 at the current projections.

My unofficial estimate is that GE will be the big winner in the Dogs of the Dow. This Dog of the Dow will be at $25 a share by the end of the year, and the quarterly dividend will be increased to 19 cents. GE has made money for its investors for almost a century, and minus the 10 years which have been up and down, its ready to be a top stock once again.

GE was a Dog of the Dow back in 2009. Even with their poor year in 2009, if you bought the stock the first week of January, then sold it the first week of January in 2010, you would have still made a profit. This is why, as I stated above, I will bet on GE making you a profit for 2012.

Disclosure: I currently do not own any shares of GE. However, I may place a limit order on the stock during the month of February.

Go back to my original post for 2012 Dogs of the Dow. 2012 Dogs of the Dow

Originally published February 16, 2012

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