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MichaelC
Guest
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 Posted:
Sat Oct 01, 2005 12:02 am Post subject:
Re: Finding Funds that Invest in Dividend-Paying Stocks? |
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"jIM" <noreplysoccer@hotmail.com> wrote in message
news:1128103842.214578.146090@o13g2000cwo.googlegroups.com...
| Quote: | being much younger, I am sure I will be learning some lessons on my own
long after your fingers prevent you from typing...
my understanding is MOST of the S&P's returns over the years have come
from "reinvested dividends" and not growth of principle. The exact
numbers escape me, though.
in the numbers you gave, there were 500 stocks making up S&P, which
paid $6.58. 25 years later, there are 500 stocks, many of them
different, which pay $24.92. Is there any evidence to suggest that
most of these stocks are the same and have grown, or the dividends are
coming from new sources?
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Jeffrey Siegel analyzes this question (in more detail than you'd care to
know, most likely) in the book The Future for Investors.
Mike
| Quote: |
The biggest assumption made in the post from you was the stocks were
bought at the high point (so a person had to "pay" $1227 to get the
$24.92.). If I pay the $1227 now, I would expect the amount paid in
dividends to be much greater than $24.92 every other year I hold the
investment. So evaluating this model on todays dividend payout is not
the way I evaluate the situation.
But at same point, there may be merit to what you are suggesting, but I
am sticking to my guns at age 32 my dividends will be much higher based
the general trend of increasing dividend payouts.
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Ed
Guest
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| Posted:
Sat Oct 01, 2005 12:02 am Post subject:
Re: Finding Funds that Invest in Dividend-Paying Stocks? |
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Elle, I can't believe how stupid you are.
PhD and a dummy. A mind is a terrible think to waste. |
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Elle
Guest
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| Posted:
Sat Oct 01, 2005 12:02 am Post subject:
Re: Finding Funds that Invest in Dividend-Paying Stocks? |
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"jIM" <noreplysoccer@hotmail.com> wrote
| Quote: | being much younger, I am sure I will be learning some lessons on my own
long after your fingers prevent you from typing...
my understanding is MOST of the S&P's returns over the years have come
from "reinvested dividends" and not growth of principle. The exact
numbers escape me, though.
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Looking at the return each year (1) with dividends and (2) without them,
then averaging, yields returns of (1) 14.2% and (2) 10.7% on average per
annum for the years 1980-2003. I'm using Shiller's data.
I just say that reinvested dividends are a non-trivial part of stock
returns.
| Quote: | in the numbers you gave, there were 500 stocks making up S&P, which
paid $6.58. 25 years later, there are 500 stocks, many of them
different, which pay $24.92. Is there any evidence to suggest that
most of these stocks are the same and have grown, or the dividends are
coming from new sources?
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I'm not sure what your concern is. What difference does it make if they're
different? What do you mean by "new sources"?
You seem to know that large companies' dividends in absolute dollars tend to
increase, while the yield tends to stay the same. The criteria for the S&P
500 will tend to exclude smaller companies. VFINX, Vanguard's famous S&P 500
index fund, is only 10% medium and small cap, and 90% large and giant cap.
I'd argue there is a pretty close cluster of all 500's yields around a
certain dividend yield, so the growth of a "typical" 500 company of course
will tend to track the S&P 500. (That's a bit of a tautology.)
GE's dividend history back to 1980 at
http://finance.yahoo.com/q/hp?s=GE&a=10&b=5&c=1980&d=06&e=14&f=2005&g=v
GE's dividend growth is probably a little high or about average for large
caps. Its dividend has increased about 11% a year on average for the last
ten years.
Morningstar.com will give the last five years of dividend growth for
companies at least that old.
| Quote: | The biggest assumption made in the post from you was the stocks were
bought at the high point (so a person had to "pay" $1227 to get the
$24.92.). If I pay the $1227 now, I would expect the amount paid in
dividends to be much greater than $24.92 every other year I hold the
investment. So evaluating this model on todays dividend payout is not
the way I evaluate the situation.
But at same point, there may be merit to what you are suggesting, but I
am sticking to my guns at age 32 my dividends will be much higher based
the general trend of increasing dividend payouts.
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Yes, they eventually will be much higher, based on the original investment.
The yield may not vary much, though, because the principal (= stock price)
will tend to grow, and there will be spinoffs, etc. (Presumably you know
this; for the newbies etc.)
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dididodo
Guest
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| Posted:
Fri Oct 21, 2005 3:33 pm Post subject:
Re: Finding Funds that Invest in Dividend-Paying Stocks? |
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Elle wrote:
| Quote: | I see what you mean. I have been screening in the last year or so for
dividend growth stocks with a much longer record than 10 years. Inevitably
these are large (or one level up, humongous yada, usually) cap.
OTOH, some mid and small cap companies arguably promise more potential for
principal growth. If the U.S. mid and small cap companies in the Mergent
index have a ten-year record of good dividend growth, that's good enough for
me right now. I guess as I get older, I'll want the arguably higher
reliability (lower risk) of companies with a much longer record of dividend
growth, like 30 years. Which means, as you imply, I'll hold more large caps
as I age.
It's worth investigating further. I'd be interested in seeing what the
average dividend growth of the Mergent index's constituents are, broken down
by large and mid cap. I'd also want to find out what percentage is
international, since five years is not very long for the international
positions.
PEY and similar certainly seem requisite to a good retirement portfolio, if
one believes in diversification at all.
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There's some screened dividend growth stock lists here -
http://www.dividend-growth.org/blog/
dd |
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