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Non-Tech : GM - General Motors -- Ignore unavailable to you. Want to Upgrade?

To: flint who wrote (267)	9/21/2001 5:46:18 AM
From: Wyätt Gwyön	Respond to of 543

4.5% dividend may seem high, but that is only because the average stock dividend is ludicrously low these days. since 1926 the average dividend has been 4.5-5% and has accounted for close to half of profits from equities. the other half was accounted for by growth in dividends, which was on par with GDP growth. the low 1.4% avg dividend on the S&P500 today points to low expected future returns IMHO. add this 1.4% to GDP growth of say 2% over the next decade and you have a 3.4% expected return according to the dividend discount model. this is not an acceptable expected return to me compared to bonds. i believe equities must have a higher expected return than bonds to be worth buying, because equities are much riskier as the past couple weeks have shown.