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 35.47   10.3 3.40 1.84 5.19
CONSOLIDATED EDISON 57.13   13.1 4.32 2.52 4.41
MCDONALDS 94.36   16.9 5.52 3.24 3.43
WASTE MANAGEMENT 47.35   181.6 0.26 1.50 3.17
PROCTER & GAMBLE 84.47   21.5 3.91 2.57 3.04
ELI LILLY 66.53   21.2 3.14 1.96 2.95
EXXON MOBIL 97.12   12.3 7.85 2.76 2.84
JOHNSON & JOHNSON 107.99   19.8 5.41 2.80 2.59