Can it be equated to a company paying a 1% dividend or having 1% growth?
And if so, how can you prove this?
That would be the basic prerequisite for your assumption, wouldn't it?
And if so, how can you prove this?
That would be the basic prerequisite for your assumption, wouldn't it?
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@Iudicium
You can't:
100 euro share value minus 1% dividend equals 99 euro share value plus 1 euro dividend. 100 euro share and 1% growth = 101 euro share value.
What I meant is that with 1% growth it makes no difference whether no dividend is paid out or you receive the dividend and reinvest it.
Otherwise, of course, a dividend simply drains the value. You are taking money out.
You can't:
100 euro share value minus 1% dividend equals 99 euro share value plus 1 euro dividend. 100 euro share and 1% growth = 101 euro share value.
What I meant is that with 1% growth it makes no difference whether no dividend is paid out or you receive the dividend and reinvest it.
Otherwise, of course, a dividend simply drains the value. You are taking money out.
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But to what extent can it be equated that the same profit that is distributed corresponds to 1% growth of the company including the value of the share?
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@Iudicium?
100 euro share grows to 101 euro. The company pays out a 1% dividend (100 euro (share value after dividend)+1 euro dividend) or retains it (101 euro share value).
If you keep the one euro, the share grows again by 1 euro the next year and you receive another one euro dividend. The 101 euro share, on the other hand, climbs to 102.01 (compound interest). If you immediately reinvest the dividend in the first year, you will receive a dividend of EUR 1.01 in the second year. Growth and a dividend equal to growth do not differ when reinvesting the dividend. Except that you have trading costs, the money is withdrawn in the short term (so you have no growth in the period from withdrawal to reinvestment) and you have a spread when reinvesting. So you make a slight net loss compared to a pure growth share.
It also makes no difference whether the company pays out 1% or you sell 1% of your position.
100 euro share grows to 101 euro. The company pays out a 1% dividend (100 euro (share value after dividend)+1 euro dividend) or retains it (101 euro share value).
If you keep the one euro, the share grows again by 1 euro the next year and you receive another one euro dividend. The 101 euro share, on the other hand, climbs to 102.01 (compound interest). If you immediately reinvest the dividend in the first year, you will receive a dividend of EUR 1.01 in the second year. Growth and a dividend equal to growth do not differ when reinvesting the dividend. Except that you have trading costs, the money is withdrawn in the short term (so you have no growth in the period from withdrawal to reinvestment) and you have a spread when reinvesting. So you make a slight net loss compared to a pure growth share.
It also makes no difference whether the company pays out 1% or you sell 1% of your position.
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