General Electric: An Unloved Dividend Stock With Long-Term Potential

General Electric (NYSE:GE) is one of the most unloved blue chip stocks. Almost anywhere you read a GE article on the internet, commentators are quick to rip into CEO Jeff Immelt, the company's poor capital allocation decisions, the dividend cut during the financial crisis, the bureaucracy, the lack of capital returned to shareholders, the company's deceptive PR efforts, and more. And why not - there is plenty to be frustrated about if you are or were a long-term GE shareholder. Since Immelt took over the role of CEO from Welch in 2001, GE's total shareholder return (includes dividends) is a whopping 0%. Without dividends, the stock is down more than 35% compared to the near doubling of the rest of the industrial sector.

GE receives a lot of flak and skepticism from the investor community. The last 15 years have been greatly disappointing for shareholders, but the current negativity, coupled with GE's intact competitive advantages and structural transformation, create an appealing long-term investment opportunity today. Within three years, higher-quality industrial operations could account for 90%+ of earnings (up from < 60% today), Immelt could be retired (a welcome change for many investors), the dividend could be growing at a 10% annual clip (5-10%+ annual EPS growth; implied 2018 EPS payout ratio < 55%), lucrative service revenue will become even more lucrative (continued software / predictive maintenance advancements), and maybe, just maybe, sentiment around the stock will start to improve. With a 3.6% dividend yield and a reasonable P/E multiple, GE's stock appears to be an attractive investment opportunity for long-term dividend investors and is in our Top 20 Dividend Stocks list. Source: Seeking Alpha

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