While investors tend to fixate on stocks’ current yields – which are widely published and available – meaningful dividend growth can be a valuable source of hidden yields. Verizon is only growing its payout by about 2% annually – which means we should expect returns of about 6.2% going forward (4.2% current yield plus 2% projected dividend growth). No Coincidence: VZ Price Returns = Dividend Growthįuture price gains should remain modest, however. As Verizon grows its dividend, its current yield is likely to remain the same because investors will reward the stock with a higher price as they have over the past three years: ![]() It pays a 4.2% yield, but we can expect higher returns because the firm is growing its dividend every year. Total up these three “shareholder return” vehicles, and you’ve got the return that you can expect from any given stock.įor example, let’s look at income-hound favorite Verizon (VZ).
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