And we see earnings and dividend growth offsetting a modest return drag from
multiple contraction over the medium term, making equities attractive relative to other asset classes.
And we see earnings and dividend growth offsetting a modest return drag from
multiple contraction over the medium term, making equities attractive relative to other asset classes.
Not exact matches
When you purchase a broad swath of equities, say an S&P 500 index fund, the returns you can expect
over the next decade or so comprise four building blocks: the starting dividend yield, projected growth in real earnings per share, expected inflation, and the expected change in «valuation» — that is, the expansion or
contraction in the price / earnings (P / E)
multiple.
Ironically,
over the long term, that was precisely the case that existed when the company was traded, but this truth was obscured by the expansion and
contraction of trading
multiples.