“Dividends and Growth—the Two Go Hand in Hand in this Business Cycle”
“The power of a few large-cap companies to sway stock market sentiment is great. As recent corporate events illustrate, not only does good earnings news move the market, but, increasingly, dividend news is moving share prices. This is big and it’s a sign of the new age of austerity among corporations and individual investors.
Dividend investing is a growth industry because of demographics, interest rates that are historically low, and the fact that a lot of big corporations have excess cash to play with. In fact, the cash hoard among many large, brand-name companies is growing and investors can expect much more news related to increased dividends and share buybacks.
Corporations and individuals with money have the same problem. There are very few places to invest that offer a decent return. Investors seeking income can’t find the kind of inflation-adjusted returns in virtually any other capital market other than equities. Corporations with excess cash can’t invest that money and make a decent return with interest rates so low. Accordingly, they’re returning the cash to shareholders in the form of share buybacks and dividends.” Read more.
“Dividends and Growth—the Two Go Hand in Hand in this Business Cycle”
Mitchell Clark
Profit Confidential, January 27, 2011.
Image by Idea go / FreeDigitalPhotos.net.
