06-20-2014, 04:56 PM
(06-20-2014, 04:47 PM)Kerim Wrote: That is a good article -- I had missed it, thanks Eric. I'm still not convinced of the usefulness of the number, but that article does give some interesting support, I think, to the idea that there is some real appeal to higher starting yields.
One big issue with all of these analyses is, of course, assuming that yields and dividend growth rates are going to persist far into the future. The odds of a company raising the dividend by 12 percent per year for the next 30 years seem pretty remote to me. According to Robert Allen Schwartz's site, only one company has managed to do it for the past 13 years (ROST).
Makes me even more inclined to appreciate a high initial yield as a "bird in the hand."
According to his site, there have been 71 companies with a dividend CAGR of over 10% over the last 30 years. It may not be 10% every year, but good years even out the bad with many companies. There are plenty of opportunities for 12%+ Chowder numbers when looking at the 2% yield, 10% growth rate type of companies.