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Why You Should Buy General Motors Despite The Ruckus In The Auto Sector – General Motors Company (NYSE:GM)

collected by :Molly Tony

Source: StockCharts.comWhy Should You Buy General Motors Despite The Ruckus?
General Motors’ (NYSE:GM) shares also dipped as investors fled the sector, but the company’s income stream is a good enough reason to buy GM for an income portfolio.
Ford Motor, for instance, took a heavy beating last week as multiple factors convinced investors to abandon the auto sector.
General Motors’ shares throw off a dividend in excess of 4 percent and they cost income investors less than six times 2018e profits.
Importantly, General Motors’ shares are throwing off a 4.4 percent dividend yield.

as mentioned in

General Motors: Why Barra Is Wrong And Einhorn Is Right – General Motors Company (NYSE:GM)

The right for the dividend class to convert to the value class at any time?
We can also say that the dividend yield must be lower than the current earnings yield.
The expected outcome of this transaction is that the division will force the market to re-rate General Motors’ value.
The dividend yield can be transformed to a multiple by taking the inverse, which implies an 11x “dividend multiple.”
For example, in the base case, Einhorn assumed a 9% yield for the dividend class, implying a $16.89 valuation.

as mentioned in

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