Ultimately, we will select a mix of investments that have an attractive
combination of dividend yield and dividend growth potential to drive satisfactory total returns over time.
For the empire portfolio I will focus more on dividend and earnings growth
instead of dividend yield since my time horizon is essentially infinite.
This continuous demand for shares of these companies could propel the prices consistently higher, meaning high returns to price appreciation on
top of a dividend yield.
There are at least 30 - 40 small cap and mid cap stocks that can consistently outperform any large cap stocks in the
form of dividend yield and capital appreciation.
Secondly, I also worry about the
use of dividend yields as a «one - off» tool for assessing the level of dividends.
The comparison of current yield to the firm's own past
record of dividend yields allow firms with low absolute dividend yields to pass the screen.
The following portfolio review lists the 23 conservative selections from the materials sector in
order of dividend yield highest to lowest.
If, instead, you buy quality undervalued companies, your returns may be greater than the
sum of dividend yield and dividend growth.
Model 1, the simple
average of dividend yield and earnings yield, is a quick and easy method to calculate the expected return of the equity market.
The chart below shows where the current
ratio of dividend yields (foreign yield to U.S. yield) stands, in comparison to historical norms.
What I liked about these companies is that average forward P / E is bellow 20 and
most of dividend yield are above 3 %.
The Total Return approach used in our Global Equity Strategies emphasises the
importance of dividend yield and dividend growth as well as price increases.
To further examine the
issue of dividend yield and capital appreciation (or loss), the 30 stocks were divided into those with a dividend yield of 2 % or greater (higher - yielding stocks), and those with a dividend yield of less than 2 % (lower - yielding stocks).
If SureWest instituted a $ 0.80 per share dividend paid quarterly, I believe its stock would quickly shoot to $ 32.00, giving it a 10 % yield, which would be comparable to the upper
end of the dividend yield range for other Telcos.
The best of both worlds There are companies in every sector with excellent buyback programs, and most of them pay some
type of dividend yield as well.
Later investigations for comparing Calculated Rates and Historical Surviving Withdrawal Rates included the
effects of dividend yields and P / E10 and earnings yield E10 / P.
«G - I formed two
series of dividend yields, one assuming that those stocks for which they could not find dividends had zero dividends (3.77 %), and another which uses the dividend yield of those stocks for which they could find dividends (9.27 %),» Siegel says, adding that Goetzmann and Ibbotson conclude that the real dividend yield must have been between those two figures.
Aaron's doesn't provide much in the
way of dividend yield even though it has a history of increasing its dividend each year.
To make a comparison
possible of dividend yield's performance to the performance of book, earnings and cashflow over the same period, I also measured the returns beginning in 1951.
The integrated value is the
product of dividend yield score and free cash flow yield score, each of which is computed as transforming the standardized fundamental data to cumulative normal distribution, in the range of 0 to 1.
Below [chart availabe in paper], we show cumulative return obtained in our back
test of each dividend yield and payout ratio portfolios.
To test this proposition, I looked at the correlation between the values of different metrics, including trailing PE, CAPE, the
inverse of the dividend yield, earnings yield and the ratio of Shiller PE to the Bond PE) today and stock returns in the following year and the following five years:
But because 4.1 % of that outsized return was a direct
consequence of the dividend yield tumbling from 8 % to 1.2 %, the real return for stocks was a much more modest 5.1 %.
The remaining stocks are assigned a rank based on the
ratio of their dividend yield to payout ratio (the same as a trailing earnings / price ratio, or the inverse of the trailing P / E ratio).
Bottom line: Even under the optimistic assumption that for the next decade P / Es stay about where they are today, the expected return on equities remains 5.5 % a year — the
sum of the dividend yield and EPS growth, including inflation.