General Electric Company (GE): Check Out This Game-Changer

General Electric Company (GE)The wealth-building power of compound interest will never cease to amaze me. It’s a story of patience and attention to detail, where small, short-term differences add up to massive divergence over decades. And in the end, the biggest winners don’t always deliver the fattest share-price returns.

Today, I’m taking a closer look at General Electric Company (NYSE:GE). General Electric Company (NYSE:GE)’s stock has underperformed the Dow Jones Industrial Average (Dow Jones Indices:.DJI) over the last two decades, but it’s a different story if you reinvested General Electric Company (NYSE:GE)’s dividends along the way.

GE Chart

GE data by YCharts.

The industrial giant was a bona fide dividend aristocrat once upon a time, before the 2008 recession and sweeping internal restructuring necessitated a massive dividend cut. GE has been replacing the lost payouts at top speed since that dramatic cut, but it’s a long haul. Today’s dividend is roughly on par with GE’s payouts in 2003.

On the upside, General Electric Company (NYSE:GE) still has plenty of headroom to boost the dividend policy, backed by $16 billion in free cash flows last year. Dividend payments accounted for $7.2 billion of that inflow, and another $4.2 billion was pumped into share buybacks.

On the other hand, General Electric Company (NYSE:GE) sported $26 billion of free cash flows as recently as 2010, so the cash trends are going in the wrong direction.

GE has certainly been around the block and seen its share of downturns since it was founded in 1878. Right now, the company is battling an unusually strong horde of personal and economywide demons. The stock is lagging behind its Dow peers in the post-recession era any way you slice it, but there’s an upside to low share prices, too.

Buy General Electric Company (NYSE:GE) today, and you’ll lock in a 3.4% dividend yield. That’s above the company’s 25-year average yield and higher than the average Dow stock’s payout percentage as well.

GE Dividend Chart

GE Dividend data by YCharts.

If you believe GE will work through its issues and bounce back stronger, this could be the perfect time to take action.

The article How Dividends Change the Game for Holders of GE Stock originally appeared on Fool.com and is written by Anders Bylund.

Fool contributor Anders Bylund holds no position in any company mentioned. Check out Anders’ bio and holdings or follow him on Twitter and Google+.The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!