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 42.36   20.3 2.09 1.96 4.71
EXXON MOBIL 81.08   43.1 1.88 3.00 3.71
CONSOLIDATED EDISON 76.61   18.6 4.12 2.76 3.68
MCDONALDS 128.65   23.7 5.42 3.76 2.94
PROCTER & GAMBLE 91.05   16.6 5.50 2.68 2.93
JOHNSON & JOHNSON 122.73   20.9 5.88 3.20 2.68
ELI LILLY 82.87   32.1 2.58 2.08 2.57
WASTE MANAGEMENT 73.15   27.6 2.65 1.64 2.25