The Homa Files

Disclaimer: I’m biased — I own a bunch of GE stock and want it to do well.

* * * * *

Wall Street analysts are all over GE because of  its dividend policy: it uses cash and the yield is very high at the stock’s current price (approximately 10%).

With a little over 10 billion shares outstanding, the annual dividend payout is about  $14 billion.

But, GE estimates about 40% of its shareholders are retail investors who count on the dividend.

And, analysts estimate that retail investors annually reinvest $4 billion to $5 billion of their dividends in the company’s DRIP

So, the net cash outflow is under $10 billion annually … and, oh yeah,  the company is sitting on $48 billion in cash (end of Dec) — up from $16 billion (end of Sept.)

I must be missing something … 

* * * * *

Reference:
http://www.thestreet.com/story/10459290/1/ge-dividend-a-cause-for-concern.html?puc=_cnnmoney&cm_ven=CNNMONEY&cm_cat=Free&cm_pla=Feed&cm_ite=Feed 

* * * * *

Want more from the Homa Files?
Click link =>  The Homa Files Blog

This entry was posted on January 29, 2009 at 7:47 am and is filed under Investments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.