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...
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|PROCTER & GAMBLE||89.75||24.3||3.69||2.68||2.99|
|JOHNSON & JOHNSON||118.13||22.2||5.32||3.20||2.68|
Older articles featuring At&t (T):Put Yourself Through The Dividend Growth X-Ray Machine
AT&T Declares Quarterly Dividend
My 85 Stock Portfolio Evaluation Of Want To Buy Prices And Yields For Purchase - Includes BDCs And REITs
Dividend Growth Investors, Wake Up!
Dividend Update - August 2016
My 4% Dividend Yield Portfolio: Looking Forward To Add Digital Realty Trust
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Dividend Champion Portfolio - September Update
5%+ Dividend Yield Portfolio: Outperformance Continues (Aug 2016 Review)
Bert's August Dividend Income Summary