If Dividends Reduce Intrinsic Value, Will Dividend Investing Become Inferior?
Jul. 29, 2014 • 20 Comments
- Even if intrinsic value reduces by the amount of dividend, analysis shows dividend investors can outperform growth-only investors (all else being equal and dividend tax rates remain benign).
- Taxes will impact net results, but retail investors with modest assets will do better with dividend portfolios (for comparable earnings growth rates).
- Dividend growth rates will not matter if intrinsic value reduces with dividends. This is clearly not observed in practice where higher dividend growth rate often also results in capital appreciation.
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