Timmy elsewhereDecember 19, 2013 Tim WorstallTimmy Elsewhere2 CommentsAt the ASI. Some Americans seem to think that dividends are a bad idea. previousJesus Christ, get it right will you, Telegraph?nextBoth Ritchie and Margaret, Lady Hodge, get it wrong again 2 thoughts on “Timmy elsewhere” cjcjc December 19, 2013 at 9:27 am He is completely wrong. See, e.g., Arnott & Asness, 2003. “We investigate whether dividend policy, as observed in the payout ratio of the U.S. equity market portfolio, forecasts future aggregate earnings growth. The historical evidence strongly suggests that expected future earnings growth is fastest when current payout ratios are high and slowest when payout ratios are low. This relationship is not subsumed by other factors, such as simple mean reversion in earnings. Our evidence thus contradicts the views of many who believe that substantial reinvestment of retained earnings will fuel faster future earnings growth. Rather, it is consistent with anecdotal tales about managers signaling their earnings expectations through dividends or engaging, at times, in inefficient empire building. Our findings offer a challenge to market observers who see the low dividend payouts of recent times as a sign of strong future earnings to come.” http://www.bylo.org/temp/surpriseHigherDividendsUNLOCKED.pdf Dongguan John December 19, 2013 at 2:05 pm Why would anyone invest if there was no dividens? You need a return on your investment and that is what dividens are… right? Leave a Reply Cancel replyYour email address will not be published. Required fields are marked *Comment Name * Email * Website Save my name, email, and website in this browser for the next time I comment.