Elle Navorski wrote:
- quote -

He also dismisses - without a decent argument - those perfectly valid
reasons why an investor who thinks like an owner would prefer dividends.
"Would you want Warren Buffett to pay out cash as a dividend" is such a
bad example, because Buffett is running such an unusual sort of company.

And he's forgeting a Corporations 101 lesson which is that businesses do
eventually reach a mature point where they make stuff, sell it at a
profit, and pay out the profits to the owners. It's not necessary, and
often isn't desirable, for the company to forever reinvest all of its
retained earnings in new products, markets, businesses. That Peter Lynch
mantra, "stick to your knitting" - and let your owners allocate (or
spend) the capital you don't need.

-Tad

JLP, I agree that's an interesting article. But as you may have noticed, he
seems to ignore those who buy blue chip, slow growth, relatively high
dividend-paying stocks for the income. Also, I'm not so sure high-dividend
paying stocks (blue chip slow growth or not) are categorically way
overpriced. He mentions SBC. That's probably the most extreme example he
could have picked. I was considering SBC recently and, at least by my crude
measures using Morningstar, compared to other telecommunications companies,
its P/Es are not so hot, and I won't touch it.

I reckon REITs, for one, may be a tad overpriced. But it's really hard for
me to say. Nothing leaps out too much, across the board for REITs.

The anecdotal checks I'm doing at the finance.yahoo site show dividend
growth in the last few years is not so great, but that's to be expected.
Going back as far as the 1960s for a wide array of companies is
instructive. I think the most important point I'm noticing is that dividend
growth does seem to keep up with inflation. While I want to look at this
more, if true, that's important for the fixed income folks.

"JLP" <AllThingsFinancial[at]hotmail.com> wrote
- quote -

Elle,

You're very welcome. I found this
(http://www.seekingalpha.com/2005/01/...ndpaying_.html)
article this morning and thought it was interesting. Just because this
guy isn't fond of divident-paying stocks, doesn't mean you shouldn't
buy them. I just thought the article was interesting.

JLP

http://AllThingsFinancial.blogspot.com

Bucky,

I should have clarified that my interest is in planning for income in the
future, using stocks I plan to hold for a few decades, at least. A lot of
that income will be from stock dividends. So I don't care about future
yields. Only future *absolute dollars* from the dividends. Not that this
can be predicted perfectly. But knowing historical trends will help my
confidence in my planning.


"Bucky" <uw_badgers[at]mail.com> wrote
- quote -

JLP--thanks. That's definitely a great tool and will help a lot as I try to
guesstimate trends in dividend growth.

"JLP" <AllThingsFinancial[at]hotmail.com> wrote
- quote -

Elle Navorski wrote:
- quote -

Personally, I don't think dividend/cost basis is that relevant. It's
great that the blue chip stock's dividend has increased 5x, but if the
stock price increased 10x over the same period, that means the dividend
yield has gone down and not kept up with the stock price.

I think you just want to analyze historical yield (dividend/value on
distribution date) and see that it is steady (or increasing).

You might check http://standardandpoors.com. They may have that
information.

If you are talking about an individual stock, you might try this site
(I put a link to the dividend history of GE, you can change it to
whatever company you are following):

http://finance.yahoo.com/q/hp?s=GE&a...e=2&f=2005&g=v
Best of luck!

JLP

http://AllThingsFinancial.blogspot.com

Using the cost basis of one of my better stock picks (a blue chip stock),
the dividend yield has grown from something under 4% (at purchase around
1986) to 21% today. In the last several years, the dividend yield has
increased about 10% per year.

I haven't come across very good long-term historical statistics on dividend
growth. Has anyone a citation on this topic, or, say, commentary based on
some 30 or so years experience watching their dividends grow?

I'd love to know the average annual dividend increase for, say, all the
stocks in the S&P 500 over the last ten years, the ten years prior to this,
and maybe ten more years prior to this.

It's not critical to my stock selections; just something I want to factor
in as I maintain my portfolio.

I grant that studies on portfolio allocation (like Trinity's) most likely
do factor this in, just not in an obvious way. It's a topic for the very
analytical investor, I suppose.