In some ways, the dividend actions by companies provide investors with insight into management and the board's expectations of a company's future earnings prospects. This valuation methodology is what led to using the "dividend discount model" as a way to value companies. Importantly, the DDM can further be used to relate the value of a stock to a company's fundamentals.
Generally, companies do not want to reduce or slow their dividend growth rates as investors in these types of companies have come to expect a certain level of dividend growth or income growth. If the growth rate slows or other financial ratios begin to trend in the wrong direction due to a company's desire to maintain a certain dividend growth rate, this provides investors with important insight into the future return potential for a stock. Additionally, as noted in a recent research report by Fidelity's Market Analysis, Research & Education group, dividends are a critical component of a stock's overall return.
Source: Disciplined Approach to Investing
Related Articles:
Dividend Growth Stocks News
- Should You Buy the 3 Highest-Paying Dividend Stocks in the Nasdaq-100? - Yahoo Finance - 7/20/2025
- Why These 3 High-Yield Dividend Stocks Are Essential for Building a Resilient Passive Income Portfolio - AInvest - 7/20/2025
- 3 Dividend Stocks to Hold for the Next 10 Years - MSN - 7/20/2025
- Best Dividend Stocks Well Researched Market Strategies - Triple-digit wealth increases - PrintWeekIndia - 7/20/2025
- Best Dividend Stocks Insider Knowledge Stock Picks - Free Bull & Bear Market Updates - PrintWeekIndia - 7/20/2025
- Chevron Corporation (CVX) Dividend Stock Analysis - 7/18/2025
- Emerson Electric Co. (EMR) Dividend Stock Analysis - 7/11/2025
- Amgen, Inc. (AMGN) Dividend Stock Analysis - 6/27/2025
- W.W. Grainger, Inc. (GWW) Dividend Stock Analysis - 6/20/2025
- Abbvie Inc. (ABBV) Dividend Stock Analysis - 6/13/2025
Dividends Matter During Inflationary Periods
Posted by D4L | Saturday, November 27, 2010 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.