Documente Academic
Documente Profesional
Documente Cultură
WHITE PAPER
August 2010
Exhibit 1 Exhibit 2
The Churn and Burn Age Return Generator by Time Horizon
(Average holding period for NYSE listed stocks, in years) (S&P 500)
11 100%
10 90%
9 80%
8 70%
7
60%
6 Dividend yield
50%
5 Dividend growth
40%
4 Change in valuation
Valuation
30%
3
2 20%
1 10%
0 0%
1920 1930 1940 1950 1960 1970 1980 1990 2000 1 Year 5 Year
10
The importance of dividends over the long term isn’t just
a U.S. phenomenon. The same patterns hold true across
5 a wide variety of global equity markets. For instance, in
Europe, 80% to 100% of the total returns achieved since
0
1970 have come from dividends (combining yield and
-5
real dividend growth).
-10 Exhibit 5
1871-2009 1982-2000 2000-2009
Dividends Matter Around the World
Source: GMO
nd
K
SA
n
s
y
nd
an
pa
nc
U
Ita
la
U
rla
m
Ja
er
Fr
er
he
itz
Exhibit 4
G
Sw
et
N
80 110
70 Great Depression 100
Implied dividends
60 90
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 80
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: GMO
Source: GMO
Of course, we need an estimate of intrinsic value to truly
assess the scale of opportunity that the dividend swap Dividend swaps have two other noteworthy features.
market presents. Historically (since 1988), dividends for First, they offer an implicit inflation hedge. Dividends
the Eurostoxx 50 have grown at an impressive nominal are a nominal concept (paid as they are in today’s prices).
Source: GMO
Mr. Montier is a member of GMO’s asset allocation team. He is the author of several books including Behavioural Investing: A Practitioner’s Guide to Applying
Behavioural Finance; Value Investing: Tools and Techniques for Intelligent Investment; and The Little Book of Behavioural Investing.
Disclaimer: The views expressed herein are those of James Montier and are subject to change at any time based on market and other conditions. This is not an
offer or solicitation for the purchase or sale of any security and should not be construed as such. References to specific securities and issuers are for illustrative
purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities.
Copyright © 2010 by GMO LLC. All rights reserved.