Purchase of GE with money from MCD
If you’ve been following my latest posts, I did go ahead and sell MCD. As a dividend growth investor, stagnant stocks aren’t usually what would cause me to sell. In fact, I might even buy more or at least hold, allowing the reinvested dividends to be even more effective.
It was MCD’s current business model and potential for difficulty with paying future dividends (at least in the short term) that forced my hand. I may repurchase MCD once I feel that they are financially a little stronger.
Since I’m not living on the dividend income yet, what really matters at this point is what combination of investments can provide the most total increase, including dividends and capital gains. With this recent purchase of GE, I feel that I’ve accomplished both those goals: a higher current dividend with more potential for dividend growth plus more potential for stock gains that will likely outpace the market.
On 4/9/2015, I sold all 31.8391 shares of MCD, taking a capital loss of $136.19. Total dividends collected amounted to $175.69. Immediately after selling MCD, I bought 130 shares of GE at 25.02/share. Given that GE has a slightly higher dividend than MCD, my net annual income actually increased by $11.35 to $4,240.26.
It looks like I just bought GE at the right time too because the very next day GE stock jumped up almost 11%. I’m glad I didn’t wait any longer!
I control 410 shares of GE at a current value of $11,698. My three largest holdings are now AAPL, GE, and V.
I am now invested in 29 companies. My online portfolio has been updated to reflect these changes.
|Company||Symbol||Shares||Price||Yield||Expected Annual Dividend|
Forward 12-Month Dividends: $4,240.26 ($353.36/month).
Full disclosure: Long GE
Wow very good timing on your purchase of GE that’s for sure :).
I have just added your blog on my blog list. Keep up the excellent work!
Fab recently posted…Automatic Purchases: PM, NSRGY, NOV, RDS.B, BBL
Thanks, Fab. If I was a day trader I might have sold and taken the profit! Quite good money for less than a day’s work.
Thanks for the add on the blog list. I’ve been following yours on mine as well.
You’re a genius, Scott — excellent timing!
I find it interesting that you’ve decided to move on from MCD. I’m not quite ready to give up on it, yet. As far as GE is concerned, I’m still skeptical given the dividend cut in 2009 when things got bad. This restructuring looks interesting, though, and I wish you the best of luck with your buy!
FerdiS recently posted…Quarterly Review, Q1-2015
Thanks, FerdiS. I wouldn’t say a genius, just lucky timing! It was a tough decision to move on from MCD. More likely than not MCD will find some growth or at least enough to continue its dividend increasing streak. If anyone is able to it will be MCD.
However, for that slim chance that MCD has to cut its dividend, hold it, or just can’t grow the stock, I’m able to get an equal or higher dividend with promise of more growth right now from GE.
I owned GE directly through their DRIP plan back in 2004. I ended up selling it in 2011. While I would have done okay retrospectively if I had just held onto it, it actually worked out okay. I was able to invest that money in companies that were paying a higher dividend with better stock appreciation than GE was providing. Since I’m not needing the income now to live on, the total increase is what really counts for me now, be it via dividends and/or capital gains.
Now that GE has matured into a better managed company, I am back in it. I’ll be back in MCD once it can adjust to the new climate as well.
Talk about good timing. I’ve contemplated trimming my exposure to MCD but need to do more analysis to see if it’s something I need to do for sure.
JC recently posted…Weekly Roundup – April 11, 2015
Thanks! I bet it would be fine to stick with MCD. After 38+ years of increasing dividends, they’d have tons of people hating them if they stopped that now. However, as discussed above, even if they do keep the dividend, there are other stocks out there that will likely have a higher total increase. I would like to eventually get back into the restaurant industry. Thanks again for commenting!
Very nice job on the timing. Hopefully, we have hit the stride. We shall see.
Robert the DividendDreamer
I definitely like this new direction of a leaner GE. The financial division was great while it lasted but the return to their strengths as an industrial/ research powerhouse should provide more sustainable results.
Great purchase. GE is my biggest holding and was pleasantly surprised when the stock popped by over 10% on Friday. Of course the stock is taking a breather today, but I am looking forward to seeing the stock performance 5 years from now.
Dividend Growth Journey recently posted…My first $10,000 stock
GE happens to be my biggest holding. Hopefully, we get through this week and start to see things play out to the upside.
Robert the DividendDreamer
Thanks. GE is now my second largest holding after AAPL and now just beating out V. I hope to be able to buy much more over the next few years before they really take off.
I’m still optimistic about MCD. I bet they will be able to turn their fortunes around, however, I’d rather own a stock now that pays a dividend plus has possibility for good growth than a stock “dead in the water.”
I’m also worried about the latest strikes of workers seeking more money. They want $15/hr!? Really? Pharmacy techs make about that much and that requires much more skill and education. Maybe some of these fast food workers are realizing that these kind of jobs are there to gain job experience before moving on to better things. Fast food jobs are not meant to be ones final destination job. Anyway, I’ll have to write a more detailed blog post about my feelings on that…
dividenddreamer recently posted…General Electric’s Rise From Mediocrity
Good move on selling MCD. I agree with you, I was called a trader when I got rid of MCD last fall, but I’m having a hard time seeing the stock generating value over time. If it changes, I’ll be there to get back on the train!
It will be interesting to see how GE will evolve overtime. This is definitely a strong companies trying to digging its way out of the hole. Good trade!
DivGuy recently posted…Dividend Income Report; The Good… and the Bad
Thanks, DivGuy. I was thinking selling MCD to buy GE was a good long-term move. Never knew how quickly it would pay off! Like you, once I see some growth potential back in MCD, I’ll get back in. Thanks for visiting and commenting.
Great buy with GE. You seem to be bucking the trend of many GE sales since the dividend freeze was announced.
DivHut recently posted…Recent Stock Purchase â April 2015
Thanks! I’m definitely liking the leaner GE. I like that they are getting back to their roots. I have no doubt that MCD will turn around but just think GE is a better value at this point, even now after the jump in stock price.
I wish a little that they were returning the sale of some of their financial/ real estate assets to shareholders in the form of dividends rather than buybacks. I have no doubt that they’ll start raising their dividend again soon.