Why do I get the feeling that this is the foundation of successful investing over time. In the short term, 0-3 years, there are ALL KINDS of influences that affect stock prices, mostly emotional or herd mentality. But am I correct in seeing that over the long haul, 5-10-20-30 years, dividend growth and EPS growth rule the day? Does ROIC match to dividend/EPS growth?
This is a fantasic breakdown of the engines that drive long-term returns. The Microsoft case study really drives home how critical valuation is - you can have all the operational excellence in the world, but buying at a 50+ P/E will destroy decades of returns. I particularly appreciate the focus on cash flow predictability as the reason Costco, Microsoft, and S&P Global warrant premium multiples. What's often overlooked is how dividend reinvestment turns market volatility into an advantage rather than a problem. The sequence risk comparison you showed is eye-opening - same average return, dramatically different outcomes. That's why dividend growth provides such psychological comfort during market turbulence - you're getting paid to wait while accumulating shares at discounts.
And I watch my stocks as their yield on cost, YOC, skyrockets. You could have what you think is a boring non-volatile stock, but when you look at it 5 years later, you're getting a 15% yield on the original investment when the published yield is 2%. Do not only listen to the financial news only. Check all of this. It's how Buffett has gotten stinking rich. I wish someone would publish his portfolio with the YOC beside each investment. It would blow you away.
General thought and may I just missed something obvious. Understanding it varies wildly depending on the vehicle with which you buy the compelling dividend equities, what about taxes? Certainly with REITs.
Why do I get the feeling that this is the foundation of successful investing over time. In the short term, 0-3 years, there are ALL KINDS of influences that affect stock prices, mostly emotional or herd mentality. But am I correct in seeing that over the long haul, 5-10-20-30 years, dividend growth and EPS growth rule the day? Does ROIC match to dividend/EPS growth?
This is a fantasic breakdown of the engines that drive long-term returns. The Microsoft case study really drives home how critical valuation is - you can have all the operational excellence in the world, but buying at a 50+ P/E will destroy decades of returns. I particularly appreciate the focus on cash flow predictability as the reason Costco, Microsoft, and S&P Global warrant premium multiples. What's often overlooked is how dividend reinvestment turns market volatility into an advantage rather than a problem. The sequence risk comparison you showed is eye-opening - same average return, dramatically different outcomes. That's why dividend growth provides such psychological comfort during market turbulence - you're getting paid to wait while accumulating shares at discounts.
And I watch my stocks as their yield on cost, YOC, skyrockets. You could have what you think is a boring non-volatile stock, but when you look at it 5 years later, you're getting a 15% yield on the original investment when the published yield is 2%. Do not only listen to the financial news only. Check all of this. It's how Buffett has gotten stinking rich. I wish someone would publish his portfolio with the YOC beside each investment. It would blow you away.
General thought and may I just missed something obvious. Understanding it varies wildly depending on the vehicle with which you buy the compelling dividend equities, what about taxes? Certainly with REITs.
Appreciated.