"Could dividend returns be higher because stock prices are lower"
Pat Mucci -
Dividends are
higher on an absolute basis because companies are
raising the amount they pay in dividends. Dividends
yields are, in many cases
lower because stock prices are
higher, as we have had an enormous stock market rally over the past 7 quarters. Did you miss it? Do you understand the difference between the amount of a dividend and the dividend yield of a stock?
You last were bitching and moaning about the economy several months ago. According to the current issue of BARRON'S, in the last four months of the year, the stock market (S&P 500) was up 20%. In the last 120 quarters (30 years), there have only been 16 quarters where the stock market has been up 10% or more and two of those quarters were the 3rd & 4th quarter of 2010. Indexes that track the performance of smaller publicly-held companies, such as the Russell 2000, are up even more. If that is not an
enormous expression of confidence in the future, I don't know what is.
In addition, according to Bloomberg News, the CEO Confidence Index, the Conference Board Consumer Confidence Index and the NFIB Small Business Confidence Index are as high or higher than they have been in 2 years.
I expect this year will offer better economic news and more subdued stock market returns. Regardless, many, many people are indeed richer than they were 24 months ago.
With regards to what companies are doing with their stronger balance sheets, we are seeing a marked pick-up in acquisition and merger activity. Here are just some of the M&A headlines from the past 5 days.
http://finance.yahoo.com/news/category-m-a/If corporate CEO's and their boards did not have confidence, do you really think we would be seeing this much activity?
As always, growth in jobs and employment will be a lagging indicator.
I have been a professional in the investment business for 30 years now. You are free to accept or reject the information and opinions I have offered. I could care less.
But, I would ask you one thing. Be sure to let us know the day you turn bullish on America. That will be the day I start selling all my stocks.
DT