Stocks for retirees don’t get much bluer than blue-chip General Electric (symbol GE (opens in new tab)). After all, it’s the only remaining member of the original Dow Jones industrial average. GE’s current strategy is to focus on its industrial roots, manufacturing everything from locomotives to jet engines to power generators and more. That doesn’t mean, however, that it intends to be stuck in the past. It’s also reconfiguring itself to be a centerpiece of the 21st-century industrial sector. That gives retirees a way to invest in both the slow-but-steady growth of the old economy and the more explosive growth found in the high-tech future. Here are three reasons that GE looks like a great fit for a retirement portfolio.
New Strategy
GE sold off most of its financial businesses and merged its oil operations with Baker Hughes to form a separate publicly traded company. Those moves help GE distance itself from risks in the financial sector, as well as from low oil prices. GE is now a more streamlined conglomerate and its fortunes are clearly tied to the industrial sector. That makes it easier for investors to both understand and value.
At the same time, GE is investing in newer, high-tech products and processes. It aims to generate enough revenue from software to be a top-10 company in the software industry by 2020. It’s also taking stakes in or acquiring business in the fields of 3D printing, robotics and renewable energy, among other endeavors.
Sponsored Content
(opens in new tab)
Fair Price
GE’s stock isn’t a bargain, but neither does it look overpriced. Shares trade at 19 times expected earnings for 2017, with earnings forecast to rise 11%, according to a survey by Zacks Investment Research. Standard & Poor’s 500-stock index trades at 17 times expected earnings on a 2017 growth forecast of 9%. When it comes to value, GE’s superior growth prospects give it the edge, despite its higher P/E.
GE is also the better buy because of its dividend. The yield on GE stock is 2.9%; the S&P’s yield is just 2.1%. Analysts, on average, expect the stock to outperform the broader market in 2017.
Sponsored Content
(opens in new tab)
Returning Cash to Shareholders
Having paid a dividend every quarter for more than a century, GE’s stock is an income stream investors can count on. Dividend hikes paused from the fourth quarter of 2014 until the fourth quarter of 2016 because GE was focused on shedding its financial businesses. Last year, however, the company did repurchase $18 billion in stock through the third quarter. Reducing the number of shares outstanding gives remaining shareholders a bigger slice of the company’s profits. And GE has pledged to distribute more of the proceeds from asset sales to investors via $28 billion in dividends through the end of 2018. That’s a boost from the $8 billion in dividends it disbursed last year. It also plans to spend $12 billion on stock buybacks over the next two years.
Sponsored Content
(opens in new tab)
-
-
2 Ways Retirees Can Defuse a Tax Bomb (It’s Not Too Late!)
If you’re retired and find yourself sitting on a “tax bomb,” you may think there’s nothing you can do. But two strategies could seriously reduce your taxes in retirement.
-
5 Trends in High-Net-Worth Philanthropy
Wealthy families and organizations are giving more to charity but also targeting funding to fewer grants in their efforts to create bigger impacts.
-
9 Best Commodity ETFs to Buy Now
ETFs These commodity ETFs offer investors exposure to the diverse asset class, which is a helpful hedge against inflation.
-
What is a Recession? 10 Facts You Need to Know
Markets Fears of an economic downturn are once again on the rise, but what is a recession, exactly? We tackle this and other questions here.
-
Warren Buffett Stocks Ranked: The Berkshire Hathaway Portfolio
stocks The Berkshire Hathaway portfolio is a diverse set of blue chips, and increasingly, lesser-known growth bets. Here's a look at every stock picked by Warren Buffett and his lieutenants.
-
What Happens When the Retirement Honeymoon Phase Is Over?
In the early days, all is fun and exciting, but after a while, it may seem to some like they’ve lost as much as they’ve gained. What then?
-
15 States That Tax Military Retirement Pay (and Other States That Don't)
retirement Taxes on military retirement pay vary from state-to-state. How generous is your state when it comes to helping retired veterans at tax time?
-
5 Top-Rated Housing Stocks With Long-Term Growth Potential
stocks Housing stocks have struggled as a red-hot market cools, but these Buy-rated picks could be worth a closer look.
-
10 Best Stocks You've Never Heard Of
stocks The market is peppered with undiscovered gems boasting stable fundamentals and cheap valuations. Here are 10 of the best stocks flying under the radar.
-
5 Tax Deadlines for October 17
tax deadline Many taxpayers know that October 17 is the due date for filing an extended tax return, but there are other tax deadlines on this date.
