Dividend article references interesting research
Posted: Sat Dec 01, 2012 8:44 pm
In reference to the many times dividends have been discussed by yours truly, and the many times people ask about results, this is a link to a relevant article recently posted on Seeking Alpha.
http://seekingalpha.com/article/1037811 ... y-dividend
A couple of excerpts...
http://seekingalpha.com/article/1037811 ... y-dividend
A couple of excerpts...
Eddie Herring wrote: ...Robert Arnott and Clifford Asness and published in the Jan/Feb 2003 edition of the Financial Analysts Journal, which was studying dividend policy in regard to payout ratios, the authors constructed an index for stocks from 1871 to 2001 and determined that "the historical evidence strongly suggests that expected future earnings growth is fastest when current payout ratios are high and slowest when payout ratios are low." They went on to state that "our evidence thus contradicts the views of many who believe that substantial reinvestment of retained earnings will fuel faster future earnings growth."...
Eddie Herring wrote: ...confirmed the conclusion reached by the Arnott/Asness study that higher dividend payments actually lead to higher earnings. ...
There is a method to my madness...Eddie Herring wrote: ...Zhou and Ruland titled "Dividend Payout and Future Earnings Growth," and published in the Financial Analysts Journal, May/June 2006, have demonstrated that companies with a high dividend payout record tend to exhibit strong earnings growth. Those same companies have also exhibited a tendency to provide better returns to investors over time. ... dividend growth companies outperformed non-dividend paying companies by 8.7% per year over a recent 30-year period. ...