Income investors have little to cheer about these days, with profits plunging and dividends getting slashed, but there are some glimmers of hope.
When a long-term stalwart Blue Chip like General Electric (NYSE:GE) steps out its corporate front door and tells investors to plan on their dividend payments throughout the next year, investors pay attention. When that $0.31 per quarter dividend leads to a yield of over 10%, smart investors call their brokers and grab some shares.
Instead of seeing their holding increase in value today, GE shareholders are seeing a decline. It marks one of the greatest buying opportunities you will see in your lifetime. Shares have not been this cheap in over a decade.
GE is one of the strongest, most stable companies in America. Yes, its financial arm has gotten it into some hot water, but let’s not forget this is a mega-conglomerate we are talking about.
The company has more than enough bullets in its holster to see its way through a strong recession. GE is about far more than finance. It is well positioned in strong industries like healthcare, energy development and water filtration.
But even if Wall Street continues to focus solely on GE’s finance business, it will soon learn the error of its ways. On Wednesday, the FDIC gave the company a shot at significantly lowering its borrowing costs by backing $139 billion of its debt. It is a move that assures GE will not permanently falter due to the temporary credit crisis.
GE’s revenues will fall over the next few quarters and profitability will suffer, but investors that buy now will not care one bit as they are cashing those hefty dividend checks.
Strong companies like this do not pay huge dividends often. Take this opportunity to lock in the income stream while you still can. As soon as sentiment turns around, you can bet investors will be lined up to get their hands on shares of this great American company.
Disclosure: no positions
