A couple months ago, we decided to take $1,000 out of our emergency savings fund and buy shares in GE. The stock had dropped 12 percent after a weak earnings report, so it seemed like a good buy. We got it at about $32, and it’s now around $30. So Jon wants to buy more, and an article by Michael Santoli in Barron’s this weekend seemed to validate his instinct. You need to subscribe to read the article, but its point is that GE’s dividend is now almost equal to the yield on a treasury bond. That means you’ll make 4 percent on your GE shares no matter what, and if the stock price rises you’ll do even better. Plus, Santoli points out that CEO Jeff Immelt bought $3.5 million shares last week–always a good sign.
Still, I’m holding off for now–I don’t want to take more money out of the emergency fund. Thoughts?
UPDATE: Ok, it’s two hours later, and I’ve given in. Jon pointed out that GE has consistently raised its dividend over time. Right now, the dividend is 31 cents a quarter, which means each $30 share will earn 4 percent a year. Over time, that dividend will rise, but our initial $30-a-share investment will stay the same, so we’ll be earning a higher and higher return on our money. There goes another $1,000 of emergency fund money. But I think this is a pretty safe bet.
2 Comments
June 2, 2008 at 7:59 pm
I bought 525 shares over the last month for an average price of 31.50 a share.
I am confident GE will be selling for more than 31.50 in 12-18 monthsand that they will continue to pay dividends. Limited downside risk, good diversified company it is like buying an index fund with a great yield.
November 22, 2008 at 1:29 pm
[...] Our first purchase June: Should we buy more? October: Should we buy even more? Possibly related posts: (automatically generated)Buying GE [...]