Funtap
By Brian Nelson, CFA
Stock prices and returns are in part a function of a company's net cash on the balance sheet and changes in future expectations of free cash flow. Stock prices and returns are not driven by the dividend
You Trailed The Market Betting On REITs, Now What?
Summary
- A myopic focus on dividends may be costing investors 2%-4% in returns per year.
- Dividend Aristocrats and high-yielding companies have trailed the market-cap weighted S&P 500 in the past 10 years.
- Understanding the cash-based sources of intrinsic value and focusing on total return rather than just dividends can lead to better investment outcomes.
- You've bet big on equity REITs the past 10 years and underperformed the market return. Now what? This article will help put things into perspective.
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Analyst’s Disclosure:I/we have a beneficial long position in the shares of SCHG, SPY, VOO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
This article and any links within are for informational and educational purposes only and should not be considered a solicitation to buy or sell any security. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this article and accepts no liability for how readers may choose to utilize the content. Assumptions, opinions, and estimates are based on our judgment as of the date of the article and are subject to change without notice. Brian Nelson owns shares in SPY, SCHG, QQQ, DIA, VOT, BITO, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, VOO, and DIA. Brian Nelson's household owns shares in HON, DIS, HAS, NKE, DIA, and RSP. Some of the other securities written in this article may be included in Valuentum's simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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