can't one argue that, on the whole, corporations are paying about the same dividends as >10 years ago by the measure that matters - payout ratio
actually, payout ratio has declined. historically (i.e., since 1926 when the SPX data are available), payout ratio has been about 55% as i recall; today, it is more like 33%. superficially, it might look like cos would thus have more money to plow back into earnings growth. but the problem is, now cos spend almost another 33% of earnings on share buybacks (to offset options-related dilution). this leaves only about 33% of earnings (which works out to about 1% of market cap at today's PEs) for today's companies to plow back into their businesses. in contrast, historically cos have been able to retain 45% of earnings for discretionary capex at the like, and moreover, the historical average PE was about 14, so this worked out to about 3% of market cap.
it seems imho unrealistic that today's companies will be able to grow at historical rates while only retaining 1% of market cap, compared to the historical average retention of 3%. it would seem cos would have to make up the difference (2% of market cap) through other means, such as more stock issuance and/or greater debt loads. |
