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Pastimes : Triffin's Market Diary -- Ignore unavailable to you. Want to Upgrade?

To: Triffin who wrote (428)	10/18/2012 12:35:35 PM
From: Triffin	Read Replies (1) \| Respond to of 868

BC: DIVIDEND GROWTH INVESTING METRICS .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. During some decade-long stretches, the income from dividends is really all an equity investor has. Have a look at dividend income as a percentage of stocks' total return by decade below. You'll notice that even during "good" market decades like the 1980's, it's still an important component of your returns: It's important to understand that it's not the very highest payers you want - many high-yielding stocks got there the hard way through share price declines. It's really the 8th decile of payers that puts you in the sweet spot for total returns. Nominal yields alone are not the story. Also, it's not just high dividend payers that you should be looking for, it's companies that are growing their dividends at high rates that really amp up performance. The below chart speaks volumes. Unfortunately, one cannot simply "buy the blue line" as the companies fitting into that category are always changing. This is the pitch for active management and stock picking within the dividend space, obviously. There's a very important lesson in the below chart involving not sticking with just US equities for dividend exposure. This is a point I've made many times. In the US, we have this concept where companies only pay dividends when they've run out of things to invest in to grow the business. Foreign companies that are growing are also paying good dividends, there's no stigma about paying shareholders today and over the long-term in capital appreciation like we have here. Many foreign countries have tax laws that actually punish companies that retain too much profit, so dividends are actually favored by legislation. Just be aware of the current tax rules with regard to dividend income from foreign based companies. US telecoms are currently trading at a 79% premium to their average multiple.. Find better value in EM and European telecom stocks like Vodafone, for example.