General Motors: Staying Bullish From An Income Perspective

As an income-driven investor, there are several factors I tend to consider when deciding whether or not I’d like to move ahead and establish a position in any one particular company. For the purposes of my screening process, I prefer the company to be trading at-or-near their 52-week low (generally speaking, this is never any higher than 10% above that number), to currently possess a forward P/E ratio no greater than 12, and must currently yield at least 3.0%. Given the above mentioned criteria, I wanted to highlight a number reasons as to why I’m staying bullish and may consider establishing a position in General Motors.

General Motors Company (GM) – Based in Detroit, Michigan, General Motors Company designs, manufactures, and markets cars, crossovers, trucks, and automobile parts worldwide. The company markets its vehicles primarily under the Buick, Cadillac, Chevrolet, GMC, Opel, Holden, and Vauxhall brand names, as well as under the Alpheon, Jiefang, Baojun, and Wuling brand names. It also sells cars and trucks to dealers for consumer retail sales, as well as to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies, and governments.

Recent Fundamentals & Trend Behavior - As a result of Tuesday’s closing price of $30.11/share, General Motors now has a market capitalization of $48.32 billion, a forward P/E ratio of 12.36, and a forward yield of 3.99% ($1.20).

Its trend behavior, although fairly negative in the near-term (given the fact shares are trading 7.45% below their 20-DSMA, 9.57% below their 50-DSMA, and 13.54% below their 200-DSMA), could see a turnaround especially now that the company’s Cadillac brand is engaged in a number of new initiatives that are slated to be introduced over the next few years.

Dividend Behavior – Since first announcing that it would distribute a quarterly dividend back in March 2014, the company has made three consecutive quarterly payouts of $0.30/share. Though our expectations shouldn’t be for a 40% or 50% hike by March of 2015, I’d say that an increase of anywhere from $0.02/share-to-$0.03/share per quarter is fairly reasonable.

Conclusion - For those of you who may be considering a position in General Motors, I strongly recommend keeping a close eye on the company's trend behavior over the next 6-12 months as it should see a sustainable boost given Cadillac’s latest set of recently announced initiatives. In addition to my thoughts on the company’s upcoming trend behavior, I’d also consider keeping an eye on General Motors dividend behavior as any increase would almost certainly boost long-term shareholder value.

Disclosure: I do not own a position in General Motors (GM) but may consider establishing a position within the next 72 hours.

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