The thing is with OCA and ARV (amongst others) is by very virtue of the fact they pay a higher yield relative to RYM
in the present, they then have less capital to recycle into growth. I know OCA and ARV can get capital using other methods than a reduced dividend, but these methods come with their additional carrying costs.
Because of the above, OCA's and ARV's growth will be more suppressed than would otherwise be the case. As the year's tick by, OCA and ARV's percent yield will in relative terms to
a present-day purchase be surpassed by RYM.
RYM's growth will in addition provide a far superior Capital Gain in the medium to long term as a result.
It's a classic case, from a shareholder's perspective, of "Do I want a good return now?..... or a great return later?"
Using one of my better real-life examples:
Purchased a parcel of RYM in Nov-2008 at $1.38/share
Pre-tax dividend payments by Jun-2019 for this parcel since buying it will total $1.40/share
ie. Time for the share to completely pay for itself by way of pre-tax dividends is 11.5 years
Average dividend yield over this timeframe is 100/11.5 = 8.7% per annum.
.... and the average yield for this parcel from here-on-in will only increase.
The PE equals the
theoretical number of years for a share to pay for itself via its own earnings
with the assumption of no growth or shrink.
As the above example's
actual and real average yield (expressed like a PE... i.e. a PD Ratio - Price Dividend Ratio is 11.5, then what does that make the actual and real PE (ie the number of years for the share to pay for itself by way of its own earnings) for this parcel?
I'll let the reader do the maths. Hint the answer will be significantly less than 11.5
I am under no illusion my method of analysing the above will spark some debate.... and that is fine.
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