Rodc, looking at the recent "Great Recession," it looks like dividends-per-share were raised above the long-term growth trend in the optimism before the downturn — and then when the cuts came, dividends were simply returned back to about their average long-term growth trend. Not sure if this is true for other major recessions, but it would seem to make sense in the course of the normal business cycle.Rodc wrote:Long term returns going forward are "predicted" by current dividend yield. If we are in a recession or coming out of one, and companies cut dividends, well that is the way it will always be.
Does that really make sense?
It's also important to remember that the output from the Gordon Equation is only a rough estimate — and refining it beyond a single, whole integer is probably way too much precision!
Note: Dividends-per-share includes the effects of stock buybacks. See Hussman commentary upthread.
Source: Political Calculations