My final May purchase is General Electric. I continue to think GE is a half way decent buy at current levels. No, it's not a steal but it does trade at a most reasonable 14.5 times forward earnings. I think shares of the business are worth about $27.50 so perhaps I got in with a small margin of safety this week? Again these are not bargain prices in my opinion, but I don't think I'm paying a premium either.
At any rate GE comes with a juicy yield over 3% which should grow faster than inflation. My objective as an income investor is to replace employment income with investment income. Nothing more. Nothing less. While I always wish the stock market would go down, I can and will achieve my goals even if Mr. Market won't cooperate. These GE shares are certainly valuable towards building passive income and a passive income stream is what I'm about!
General Electric is now weighted .76% (by income) for me and I'd ultimately like to for it to be weighted around 1.5% to 2.0%.
OHI is the only stock I DRIP simply because it offers a dividend reinvestment discount. I actually received a dividend of $52.97 from the company, but a 1% discount was applied so $53.50 worth of new shares were credited to my account. Well that's nice and all (love me some discounts), but I think I'll have to stop DRIPing Omega. It has a 3.57% weight (by income) which is too high for a non core stock. Think I'll take dividends in cash and use it to maintain a better income balance moving forward. One thing I seriously hate about DRIPs is that they make portfolio balance difficult to maintain. Especially with high yielders.
The money I deposit each month is now less than 1% portfolio value. Since that barely moves the needle I feel I need to start paying closer attention to weightings. That said, I think I can achieve the weightings I want over time without rebalancing.
CI,
ReplyDeleteI'm on board with GE here also. I love the low payout and decent yield. I think GE learned its lesson from the GE Capital years and is reinventing itself nicely.
MDP
Yeah a couple years ago I would not have considered GE, but I really like the transformation. This company is all about dividend payments and has a huge back log of orders (240+ billion) to fuel it. Hope to keep grabbing shares as long as valuations and weightings make sense.
DeleteIn this bull market that is a low p/e for GE. Seems like a good buy right now. Makes sense to keep increasing your holding of it since many consider it a core holding in their portfolios.
ReplyDeleteIt's pretty decent, but I do use forward p/e's. I find the forward p/e to be more useful than trailing twelve month p/e, but future earnings might change. I don't like ttm p/e at all, yet both methods are flawed.
DeleteBest wishes!
Nice buy of GE. I'm looking to increase my stake a bit more but I need to make a larger purchase so I'm holding out for better value.
ReplyDeleteIf I had known DE was going to boost payouts I think I would have went with that this week. I also am looking at TGT, but I want to see what they'll do with dividends next month. Pretty much GE, DE, and BP are what I'm most interested in right now.
DeleteCI - I'm with you and wished Mr. Market would offer more bargains. With that said, I don't think you can go wrong with GE in the long run. The forward P/E is nice. Plus, it has a decent yield that should remain stable if not continue to rise. Wishing you the best! AFFJ
ReplyDeleteAppreciate the support. The hardest part of this process is saving money every month, it's good to have motivation to keep on going. Take care!
DeleteI do have to say I like the GE purchase. I have been thinking of adding some myself. I agree that it is not the absolute steal these days but still has some room to grow even at current levels and has a really juicy dividend yield. Thanks for sharing.
ReplyDeleteThanks DH! Have an excellent week!
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