My first $10,000 stock

General Electric (GE) popped up by over 10% yesterday after announcing sale of its finance segments as well as selling off its real estate assets totaling over $26 Billion. GE also announced a massive buyback of $50 Billion buyback program through 2018 and expects to reduce the outstanding share count by about 20%. All this information caused the stock to reach a 52-week high of $28.68. Though this is just a pop due to investor frenzy and I expect the stock to drop a bit in the next few days/weeks, I am hoping that these are nice moves for the long-term performance of the stock.

GE was one of the very first stocks that I purchased when I started investing in 2009. It has been almost 6 years since I first purchased 30 shares of GE at $13.03 on 6/15/2009. I have been a fan of GE stock and since then I have added more shares often. My last purchase was for 100 shares at $25.00 on 1/27/2014. Right now I hold 375 shares in my accounts combined and based on Friday’s (4/10/2015) closing price of $28.51, my total value in GE stock exceeded $10,000 thus giving me my first $10K stock in my portfolio. GE currently pays a quarterly dividend of $0.23/share and yields a reasonable 3.23% even after the pop yesterday. GE has been increasing the dividend from 2009 after cutting it during the financial crisis.

But the journey has not been a great one. Long time investors in GE are still upset about the stock’s performance the last few years. The stock has not recovered the hits it took during the financial crisis and also not yet reached the dividend levels it had before the crisis. 

Since mid-2009, the stock has performed reasonably similar to S&P 500 and Dow Jones as seen below.

2015-GE-5-yr comparison

 

But taking it a bit further, the stock has definitely lagged the broader market as seen below.

2015-GE-10-yr comparison

 

Graph Source: Google Finance.

The main reason for the very poor performance is the hit the stock took during the financial crisis. GE Capital’s exposure to the financial crisis led to the GE stock taking the brunt and has not recovered since then. The company has been slimming down since last year to return to its industrial core by spinning of GE Capital as Synchrony Financial (SYF). GE still owns a large chunk of SYF shares, but will be divesting completely by the end of the year. I hope the things have started to change since GE decided to return to its industrial roots and have been selling or spinning off non-industrial assets.

With the increase, GE became my first $10K stock and I hope that this is just the first of many more $10K stocks.

What do you think of GE’s decision to return to its industrial roots and market’s reaction to this news?

 

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16 thoughts on “My first $10,000 stock

  1. Congrats on having your first $10k stock. That’s a great milestone and I can’t wait until most of my positions are that large. I was actually just contemplating purchasing some more shares of GE but after the pop yesterday I think I’ll hold off for a while. I expect DG to be low over the next year or two until the share buybacks get implemented. The payout ratio based off earnings is going to be really high so I don’t expect more than just token increases.

    Tim at The Conservative Income Investor just wrote up a nice article discussing the GE Capital asset sales.
    http://theconservativeincomeinvestor.com/2015/04/11/the-future-of-general-electrics-dividend-after-the-ge-capital-sale/

    • Hi JC,
      Yup. I think GE will coll off a bit like I mentioned in my post. The initial pop is probably due to investor frenzy and I am thinking the stock will drop by a few percentage points and then stabilize. And I read somewhere that the existing dividend will be retained until the buybacks start to kick in. Not sure if it is official. Even if it isn’t, I am sure the increases will be minimal.
      Tim’s article is wonderful and has great info. Thanks for pointing it out.
      DGJ

  2. Congratulations on getting a stock to the $10k mark! I look forward to that day myself. I am pleased with the changes to GE. Coincidentally, I saw an ancient GE desk fan today, and it made me think ‘man, they had good products, nicely designed back then’.

    Cheers

  3. Congrats on hitting your first $10K stock, DGJ. As im sure, the 10% pop must have sent you over the moon yesterday 🙂

    Upwards and onwards…best wishes
    R2R

    • Thanks R2R.
      And yeah. GE stock has been range bound for a long time now and wasn’t expecting much until the end of the year when SYF was fully divested. This news was unexpected and surely made the stock pop. But most likely, the stock will cool off by a few percentage points before settling down.
      DGJ

  4. That 10+% pop would have made many investors very excited! I bet you’re excited, too… Are you going to hang on to all your shares? I notice GE is now more than 10% of your portfolio. Are you happy with the risk profile? Personally, I try to diversify so that one position does not dominate in that way.

    Cheers
    FerdiS

    • Hi FrediS,
      The pop definitely made me excited. I am planning to hang on to my shares. Like I mentioned, I like GE for the long term and though the stock has performed on par with the index since 2009, I feel the stock has lot more room to grow in the next 5 years after the company sheds all their non-core assets and buybacks are taking effect.
      I understand that the stock is over 10% of my portfolio, but I definitely don’t intend it to be that way. The stock was over 10% of my portfolio at the end of March and will be much more than that now. Also, GE contributes over 13% of my dividend income. My investments in GE were all done way back that has grown to what it is now. I haven’t added any stocks since Jan 2014. I am not going to sell the stock and I am sure that my investments in other stocks/sectors will reduce my weight in GE over the course of time.
      Regards,
      DGJ

  5. This is great news, DGJ 🙂

    Big congrats on that magically 10K number. That’s awesome you got in the first batch as low as $13! Good job and I’ll be curious to see how this all works out for GE, wishing the best for you and this business!

    • Thanks Ryan.
      Yup. My first investment was around $13 and I always wished that I invested more aggressively those days like I am being now. Of course I was just starting out and was little conservative while trying to get my feet wet. Like I say, something is better than nothing.

      Cheers,
      DGJ

  6. That’s something to cheer up to! 😉 Do you plan on purchasing more shares of GE? Just trying to see what’s your plan to maintain some kind of diversification?

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