Monday, April 4, 2011

10 by 10: The Interaction of Dividend Yield and Growth

David Van Knapp submits:
One of the most-referenced articles I have published is the original 10 by 10 method for understanding the interplay between dividend yield and dividend growth. I thought it would be good to update that article, introduce the concept to a new generation of dividend investors, and add a couple of new features.
There is a lot of discussion about the relative merits of high or low initial dividend yields (IY) compared to high or low dividend growth rates (DGR). Often this discussion comes up when someone says that he or she wants to find a ?Dividend Champion of the Future.? The person is willing to accept a low initial yield if the company is relatively young and is raising its dividend very fast. At the opposite end of the spectrum, other investors state that they want high yields now and are willing to accept slower rates of growth (or even

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