Say you have Company A trading at $10, it has no dividend payout. In 5 years (all else being equal) it's EPS triple, which causes the stock price to triple as well. At that point in time, the management says they will start paying out dividends. Assume the dividend to yield 2.5% at $30, meaning $0.075/share.
Now, in those 5 years you had 200% in capital appreciation. Now, you have $0.75/share dividend, which when compared to your initial $10 purchase price yields 7.5%.
Do people not give enough consideration to this factor?
Submitted March 18, 2017 at 07:21AM by learner1314 http://ift.tt/2nylE2H
