by tonytran2015 (Melbourne, Australia).
#company #bankruptcy, #investment, #dividend growth, #share dilution, #growth, #Net Earning, #return on investment,
Investors beware: Dividend Growth is misleading.
In analyzing return on a share investment, share-holders use the conveniently supplied figure of
Dividend/sharePrice + dividendGrowth
to compare the return with those of government bonds.
However, the figure is of little value as it is easily manipulated. An alternativefigure should be used, it is
Dividend/sharePrice – Dilution + (projected Growth in Net Earning).
1. Dividend Growth is misleading.
Indeed, the yearly schedules of payments of dividends are decided by company directors and may bear no relation with the real healthiness of the company.
Directors can even determine a schedule of increasing dividends that inevitably leads to more and more debts and eventually to the bankrupcy of the company (This is similar to the situations of many Pension Funds in USA in 2017. ,Can most pension…
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