nisiprius wrote:The reason stock prices fall is because investors expect that the company will cut dividends. Will be forced by business considerations, known to the market, to cut dividends. Eventually. The timing is bound to be uncertain and which companies will be affected how much is bound to be uncertain. To the extent that an individual company is traditionally committed to a steady dividend, if it is conservative and has reserves and a steady business, it may well be able to average things out so that the dividend stream will fluctuate considerably less than the stock price.
Here's a chart of dividend yield that Google found me: phooey, phpBB doesn't like it as a direct image link:
In 'The Great Depression: A Diary,' Benjamin Roth wrote:June 15, 1931: Stocks continue to go lower and lower and dividends are being slashed right and left....
September 9th, 1931: The Youngstown Sheet & Tube Co. at a directors meeting decides to omit the quarterly dividend. The stock is now selling at $35 per shares. This is lower than in the 1921 depression when it sold at 45....
September 10th, 1931: Many Youngstown millionaires have been hard hit by the failure of Youngstown Sheet & Tube to pay its dividend. In a great many cases these families have over a million tied up in Sheet & Tube and Republic Steel and depended entirely on these stocks for income.
December 18, 1931: ....Down, down, down goes the stock market.... one Youngstown man... bought 6000 shares Republic pfd [Republic Steel, preferred] which gave him an income of about $30,000 net. Now the Republic pfd pays no dividend and is selling at $10.
April 30, 1932: ....U.S. Steel drops common dividend and sells at 27....
January 31, 1933: For the first time since its organization (32 yrs) the U.S. Steel corporation fails to pay the regular dividend on its preferred stock. Dividend on the common was suspended about a year ago.
Yes, great graphs! Here's that uncooperative one:nisiprius wrote:Here's a chart of dividend yield that Google found me: phooey, phpBB doesn't like it as a direct image link:
inflation- adjusted dividends paid by the S&P500 reached a new high in 1911 but they then declined unevenly until they were reduced by 47.8% in 1920. The old 1911 high was only surpassed in 1929...
Starting from a new peak in 1930, dividends dropped by 46.3% in 1934, recovered a bit and then fell back to similar levels in 1946. It was only in 1956, some 26 years later, that the S&P500's inflation-adjusted dividend surpassed 1930 levels...
...inflation-adjusted dividends hit another high in 1966. This time dividends fared better with declines of "only" 24.1% by 1975. It took some 24 years to break beyond the 1966 dividend peak in 1990...
antiqueman wrote:To put this question in the most concise way I know, let me ask it the following way:
Assume a person retires and has x amount of shares of VTI ( vangaurd index fund). At time of retirement his X shares is paying him 2k a year in dividends. The market crashes, but he doesnt care about the decrease in his stock values so long as he gets his 2k from his X shares of VTI. At what point should he worry about not receiving the 2k income. Would this only occur when a large number of compaines in the index reduce their dividends?
If I am correct then it seems that a person in retirement would have a lot more stock that is normally discussed on the forum IF, that person needs only the dividends from his shares to supplement social security.pernson.
My knowledge of investment history is shallow and I should be argued with. But I try to maintain a inquiring mind and a spirit of exploring, instead of just looking where the investment salespeople point. It's a constant discovery process and in general the investment industry doesn't particularly want people to think about the crashes. Ten years ago, I don't think I'd even heard of about the Long Depression that followed the panic of 1873. The big thing, whenever you think you've "learned" something, is to take the time to look for a data point or two for yourself--not data that someone else has picked for you--to see if it matches what you've been told.nedsaid wrote:Wow. Nisiprius ...can be counted on to wow us with their graphs and knowledge of investment history. Hard to argue with those guys.
nisiprius wrote:My knowledge of investment history is shallow and I should be argued with. But I try to maintain a inquiring mind and a spirit of exploring, instead of just looking where the investment salespeople point. It's a constant discovery process and in general the investment industry doesn't particularly want people to think about the crashes.nedsaid wrote:Wow. Nisiprius ...can be counted on to wow us with their graphs and knowledge of investment history. Hard to argue with those guys.
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