05-07-2014, 12:53 AM
While I was taken by the horsepower vs. mileage analogy and I couldn't resist posting that picture, I actually agree with Concasto that long term DGR CAGR is a good proxy for price appreciation for a mature company. They can and will vary for a while but if you model them out several decades, if they're much different the yield will get really big or really small. Therefore yield plus DGR CAGR is a good way to project total return. I'm writing up a portfolio business plan, and this idea is part of it.
Of course some companies will break the rule for a while, like QCOM giving us 20% raises on 15% earnings growth, but they are intentionally raising the payout ratio.
Of course some companies will break the rule for a while, like QCOM giving us 20% raises on 15% earnings growth, but they are intentionally raising the payout ratio.