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Don’t discount dividends as a source of income and long-term portfolio value
['Business Desk', 'Please Enter Your Name Here']
Business Day Ghana
Investors underestimate dividends as a source of value for after-tax income and their positive contribution toward the total return on equity portfolios.
In periods of low growth, dividends become increasingly important – says Standard Bank, the parent group of Stanbic Bank Ghana.
Over a long term investment horizon, dividends and the re-investment of dividends can contribute 90% of the total returns of a portfolio.
The value of dividends relative to total returns assumes more significance during periods of low growth – times we seem to be steadily heading into.
This is supported by research that shows that over the years companies showed a correlation of 87% between growth in earnings and dividends.
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