general electric

General Electric’s willingness to adjust keeps it a top blue chip stock, as it cuts its losses in finance and focuses on its strengths.

GE and ABB (see box) continue to cut costs and sell less important assets, which puts them in a better position to withstand the slowdown in global growth. These moves will also spur their earnings when economic expansion picks up. GENERAL ELECTRIC CO. $25 (New York symbol GE; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 10.1 billion; Market cap: $252.5 billion; Price-to-sales ratio: 1.7; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.ge.com) has received approval from U.S. and European regulators for its alliance with France’s Alstom SA, a leading maker of parts for power plants and transmission gear. Under the deal, GE will form three 50/50 joint ventures with Alstom: one will combine their electrical grid operations, while a second will focus on products for renewable energy projects. The third will hold Alstom’s nuclear power equipment division....

GENERAL ELECTRIC CO. $25 (New York symbol GE; Conservative Growth and Income Portfolios, Manufacturing & Industry sector; Shares outstanding: 10.1 billion; Market cap: $252.5 billion; Price-to-sales ratio: 1.7; Dividend yield: 3.7%; TSINetwork Rating: Above Average; www.ge.com) has received approval from U.S. and European regulators for its alliance with France’s Alstom SA, a leading maker of parts for power plants and transmission gear.

Under the deal, GE will form three 50/50 joint ventures with Alstom: one will combine their electrical grid operations, while a second will focus on products for renewable energy projects. The third will hold Alstom’s nuclear power equipment division.

To win approval, GE agreed to sell some of Alstom’s operations. If you adjust for these sales and other changes, GE will now contribute $9.5 billion, down from the original cost of $13 billion. The company expects to complete the deal by the end of 2015.

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SYMANTEC CORP., $21.60, Nasdaq symbol SYMC, sells computer-security technology, including antivirus and email-filtering software, to businesses and consumers. In 2014, the company said it would split into two publicly traded firms. One would keep the Symantec name and focus on antivirus and security software and services. The other, called Veritas Technologies, would consist of Symantec’s information-management business, which makes products for data backup and recovery. However, the company has now decided to sell Veritas to a group of private investors for $8.0 billion. It expects to close the deal on January 1, 2016....

With subprime loans shrinking and a new deal with GE Capital in hand, blue chip stock Wells Fargo should easily keep raising its dividend.

Following the 2008 financial crisis, the U.S. Federal Reserve ordered banks and other big lenders to boost the capital (cash, bonds and other securities) they hold. That put them in a better position to absorb future loan losses. The Fed recently announced that starting in 2019, it will bring in tougher new capital requirements for the eight largest U.S. banks, including Wells Fargo and J.P. Morgan (see below). However, both Wells and Morgan have bolstered their balance sheets and unloaded many of their riskier businesses since the crisis. That should help them meet the new standards without having to issue new shares. WELLS FARGO & CO. $58 (New York symbol WFC; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 5.2 billion; Market cap: $301.6 billion; Price-to-sales ratio: 3.5; Dividend yield: 2.6%; TSINetwork Rating: Average; www.wellsfargo.com) operates through three divisions: Community Banking provides consumer mortgages, loans, credit cards and other financial services (57% of 2014 revenue, 59% of earnings); Wholesale Banking supplies business loans (27%, 32%); and Wealth, Brokerage and Retirement offers wealth management, brokerage and trust services to individuals and institutions, such as pension plans (16%, 9%). The U.S. supplies 95% of Wells Fargo’s revenue....

Our advice is keep it simple when you invest in ETFs. Three “plain vanilla” ETFs give you an efficient way of investing in U.S. stocks.

SPDR S&P 500 ETF $204.53 (New York symbol SPY; buy or sell through brokers; www.spdrs.com) holds the stocks in the S&P 500 Index, which consists of 500 major U.S. companies that are chosen based on their market cap, liquidity and industry group.

The index’s highest-weighted stocks are Apple, ExxonMobil, Microsoft, Procter & Gamble, Johnson & Johnson, J.P. Morgan Chase, Pfizer, General Electric, Berkshire Hathaway and Wells Fargo & Co. The fund’s MER is just 0.10% and it yields 2.0%.

If you want exposure to the S&P 500 Index, the SPDR S&P 500 ETF is a buy.

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WELLS FARGO & CO. $58 (New York symbol WFC; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 5.2 billion; Market cap: $301.6 billion; Price-to-sales ratio: 3.5; Dividend yield: 2.6%; TSINetwork Rating: Average; www.wellsfargo.com) operates through three divisions: Community Banking provides consumer mortgages, loans, credit cards and other financial services (57% of 2014 revenue, 59% of earnings); Wholesale Banking supplies business loans (27%, 32%); and Wealth, Brokerage and Retirement offers wealth management, brokerage and trust services to individuals and institutions, such as pension plans (16%, 9%). The U.S. supplies 95% of Wells Fargo’s revenue.

Weak loan demand and lower interest rates cut the bank’s revenue by 5.0%, from $85.2 billion in 2010 to $80.9 billion in 2011. Loan volumes improved in 2012, causing revenue to rise to $86.1 billion. Lower fee income cut the bank’s revenue to $83.8 billion in 2013. Revenue rebounded to $84.3 billion in 2014, thanks to gains at the bank’s wealth management business.

Earnings jumped 85.5%, from $2.21 a share (or a total of $12.4 billion) in 2010 to $4.10 a share (or $23.1 billion) in 2014.

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Exchange traded funds (ETFs) are set up to mirror the performance of a stock market index or sub-index. They hold a more or less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index. ETFs trade on stock exchanges, just like stocks. That’s different from mutual funds, which you can only buy at the end of the day at a price that reflects the fund’s value at the close of trading. Prices of ETFs are quoted in newspaper stock tables and online. You pay brokerage commissions to buy and sell them, but their low management fees give them a cost advantage over most mutual funds....