When it comes to distributing their profits, even Chinese companies, which aren’t exactly paragons of corporate governance, are doing a lot better than their Indian counterparts. There are some important lessons here.
Consider a stock that has a future dividend yield — expected annual payout divided by the share price — of 5%. If there was no secondary market in this stock, one would need to hold the shares for 20 years just to get back one’s investment.
A 20-year equity ‘payback’ period is no big deal in a bull market. In a report last year, Citigroup Inc equity strategist Markus Rosgen calculated the payback period for someone investing in the MSCI India Index in January 2008 as 113 years. (via Can you spare a dividend cheque?- Comments & Analysis-Opinion-The Economic Times).
Empty Andy (rhymes with empty hundi) is at it again.Does he understand what he is writing about?
Dividend yield has nothing to do with dividend payout by the companies. In fact, increased dividend payouts may lower dividend yield - as that may make the stock more attractive. The PE multiple for the stock may increase thereby decreasing the dividend yield further.
Is Empty Andy's greatest trip in life to find fault where none exists? But tragically, why does Economic Times print such trash? A business columnist and any sub-editor at Economic Times should know this.
Am I unreasonable in expecting that people will know what they are writing about?
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