NEW YORK (TheStreet) -- General Electric (GE - Get Report), the world's largest conglomerate in terms of market capitalization, is an extremely diversified company that operates in a number of different market segments. Despite the fact that the financial crisis of 2008 almost pushed the company to bankruptcy, it has managed to emerge as a strong company. GE has been quite an attractive stock for investors over the years owing to a multitude of factors.
One important factor that analysts try to evaluate is whether or not a stock is a high yielding one. Dividend yield is basically the company's dividend relative to its share prices. It can also be considered as the return on investment if there are no capital gains. A high yielding stock basically has a dividend yield higher than the benchmark average or that may have a lower share price. However, there is no universal definition of a high yield. While some investors may find a stock high yielding, others may find it low yielding.
As things stand, GE has a dividend yield of 3.33%. This can be considered a high yield by some investors and vice versa. A number of factors can determine whether or not General Electric is a high yielding stock.
Valuation of the Stock
A high dividend yield results in an undervaluation of the stock. This is because the stocks dividends, when compared to the stock's price, are higher. A company's enterprise value/EBITDA multiple can reveal whether it is undervalued or not. An evaluation of General Electric's enterprise Value/EBITDA multiple reveals that the company is undervalued. This is a major factor that points towards the fact that GE is a high yielding dividend stock.
A misconception is that a high yield stock cannot be a high dividend growth stock at the same time. However, this is mere misconception - a high growth stock can be a high yield stock too. General Electric is one such stock. GE reported growth in its dividends continuously over the last three years. It recently increased its dividend by 16%. At the same time, GE is one of the highest yielding stocks amongst global conglomerates.