Dividend-News

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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 35.50   10.5 3.40 1.84 5.18
CONSOLIDATED EDISON 57.31   13.7 419.00 2.52 4.40
MCDONALDS 95.35   17.3 5.52 3.24 3.40
WASTE MANAGEMENT 44.31   133.3 0.33 1.50 3.39
PROCTER & GAMBLE 80.26   21.6 3.71 2.57 3.20
ELI LILLY 64.37   18.0 358.00 1.96 3.04
JOHNSON & JOHNSON 102.20   18.9 5.41 2.80 2.74
EXXON MOBIL 104.28   14.1 739.00 2.76 2.65