Daily dividend news for investors in dividend stocks

Targeting A Retirement Income Level From A Dividend Growth Portfolio - Part 3

Published Wed, 21 Dec 2011 13:13:08 -0500 on Seeking Alpha

I have on occasion seen the equation put forth here on Seeking Alpha that Dividend Yield plus Dividend Growth equals Return. This is a mathematical fallacy. To quote the ever wise David Van Knapp: it's like "adding the speed of a car to its acceleration--the result makes no sense." But why do some dividend investors continue to cite this as a metric? I considered my own previous article in this series. In this article, I analyzed something that I know dividend investors intuitively understand...there is an inverse mathematical relationship between dividend yield and dividend growth. In other words, to end up with an equal result over some time period, a stock with a lower current dividend yield must have a higher growth rate than a stock with a higher current yield. Unfortunately, I think a few investors (perhaps understandably) extrapolate this relationship to conclude that it is perfectly symmetric...i.e. at...

Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
AT&T 36.52   15.5 2.35 1.96 5.23
CONSOLIDATED EDISON 73.47   19.0 3.87 2.68 3.64
EXXON MOBIL 86.92   34.5 2.52 3.00 3.46
MCDONALDS 112.08   21.2 5.29 3.76 3.16
PROCTER & GAMBLE 86.58   23.2 3.74 2.68 3.08
JOHNSON & JOHNSON 115.70   20.5 5.65 3.20 2.81
ELI LILLY 76.16   33.1 2.30 2.04 2.62
WASTE MANAGEMENT 63.36   25.2 2.51 1.64 2.61