"Each year the number of companies in the S.& P. 500 not paying dividends grows," said Arnold Kaufman, the editor of S.& P.'s Outlook newsletter, which released the figures.
CLSA calculates that dividends grew by 25% a year between 1998 and 2004 (see chart).
So yields might be 3 or 4percentt, but dividends grow every year.
The amount was initially for only a few dollars, but over time, as more oil was tapped, the dividends grew into the hundreds, then the thousands of dollars.
Even in America, the most successful economy over the period, real dividends grew by 1.6% while GDP growth was 3.4%.The report does find that prior knowledge of GDP growth would be useful.
Dividends grow roughly in line with the whole economy and 9-10% is just not plausible.This reliance on returns as the basis of the discount rate is extraordinary, when you stop to consider it.
If we assume that American dividends grow in line with GDP, that suggests a real growth rate of perhaps 2.5%, and thus a likely total real return of around 4.5%.That might be a little optimistic.
As they grow, companies issue more shares; as a result, existing shareholders do not gain all the benefits of higher profits.Over the long term, these dilution effects mean that investors do not get all the benefits of GDP growth, in the sense that dividends grow more slowly than the economy.
Which REITs are yielding at least 6% and likely to make their dividends grow faster than inflation?
"They embody everything I like to see in a company: cash flow, high margins, a good dividend that grows over time".
