Well, once again I find myself holding back on stock purchases. I’m sort of betting that rising interest rates will continue to pressure the valuations of attractive dividend payers.

And my recent picks have been, from a price standpoint, fair to middling. As I mentioned in a previous post, I made the mistake of chasing GE down (and down, and down). Now, with the latest executive shake up and write down, the company’s remaining dividend payout is vulnerable. In fact, the handwriting seems to be on the wall. (Here’s the Wall Street Journal’s warning on the dividend.)

The performance of GE’s stock continues to defy my expectations. On the day when the company unexpectedly severs ties with a CEO who’s been on the job for just a year, and announces a $23 billion write down, the stock surges to a double digit gain. I guess the market is placing a lot of confidence in the surprise CEO Larry Culp.

I continue to think that the sum of the parts is worth more than the whole, and at around $12 a share GE is a buy. But for investors looking for dividend yield? There isn’t much visibility into whether GE, or its spinoffs, will continue paying a dividend in the near term. So in light of the company’s latest surprises, I’d tend to say there are better choices out there for income oriented investors.

 

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