Investors beware: Dividend Growth is misleading

Investors beware: Dividend Growth is misleading

by tonytran2015 (Melbourne, Australia).

Click here for a full, up to date ORIGINAL ARTICLE and to help fighting the stealing of readers’ traffic.

(Blog No.82).

#company #bankruptcy, #investment, #dividend growth, #share dilution, #growth, #Net Earning, #return on investment,

Investors beware: Dividend Growth is misleading.

In analyzing return on a share investment, share-holders use the conveniently supplied figure of

Dividend/sharePrice + dividendGrowth

to compare the return with those of government bonds.
However, the figure is of little value as it is easily manipulated. An alternative figure should be used, it is

Dividend/sharePrice – Dilution + (projected Growth in Net Earning).

1. Dividend Growth is misleading.

Indeed, the yearly schedules of payments of dividends are decided by company directors and may bear no relation with the real healthiness of the company.

Directors can even determine a schedule of increasing dividends that inevitably leads to more and more debts and eventually to the bankrupcy of the company (This is similar to the situations of many Pension Funds in USA in 2017 (Can most pension funds last?, [16]).

2. Growth in Net Earning is more revealing.

The alternative figure for calculating the return on investment is

Dividend/sharePrice – Dilution + (projected Growtth in Net Earning) .

The new figure is more revealing as it tells the (accurately known) dilution of shares by the issue of bonus (free or discounted) shares to directors (Bankers-given-outrageous-incomes-by-their-boards , [5]) and it requires the (responsible) projection of the growth of Net Earning after Interests and Taxes !

3. Shareholders to construct own figures.

Company directors would not want share holders to know the blatant rip-offs using bonus shares. Indeed, shares are diluted immediately after any issuance of additional shares.

Directors also don’t want to risk sticking their necks out giving irresponsibly optimistic (often miserably failed) prediction of Growth in Net Earning after Interests and Taxes.

So companies will try to hide those two types of required figures of Dilution and projected Growth in Net Earning. Therefore investment publications would have only the figure of Div/Price plus past-Dividend-GROWTH.

However, past “performance is no guarantee for the future” in the current treacherous time. So shareholders should not expect the figures to be supplied by any company. They have to search for disclosures on bonus shares and details on operation of the company.

Finally, shareholders should be highly alerted to signs of any one of the following list of risks.

4. Sufficient single causes for a company crash.

Company Bankruptcy signs

Figure: List of single sufficient causes for a company crash. Any single cause in this list can cause a company to go bankrupt.

a/- Its banker does not want to be its easy going, friendly banker anymore. (The bank knows more than you do about the imminent cash flow of the company; see also [11]).

b/- Its clients can buy cheaper elsewhere.

c/- Its suppliers have switched to new clients (with no cash flow problem) who pay more promptly after each delivery.

d/- The company has run out of new subscribers for its new share issues (which is a substantial source of income providing for its yearly expenses).

e/- If the company cannot pay its debt installments and expenses on any due date, it is required by laws to be liquidated.


[1]. Ex-HBOS banker ‘sold his soul for swag’, bbc new,, 2 February 2017.

[2]. Wolf Richter, S&P 500 Earnings Stuck at 2011 Levels, Stocks up 87% Since, Straight Line Logic ,

[3]. Barry Ritholtz, Excessive CEO Pay for Dumb Luck,,, accessed 07 Mar 2017.

[4]. Colin Twiggs, CEO pay is rigged | Barry Ritholz, Gold Stocks & Forex,, 07 Mar 2017.

[5]. tonytran2015, Bankers-given-outrageous-incomes-by-their-boards ,, posted on December 22, 2016.

[6]. Mish Mishtalk, Margin debts hit record high-coinciding with extreme-consumer confidence,,, 30 March 2017.

[7]. stock-markets-sit-blithely-on-a-powerful-time-bomb, sentinel blog,, accessed 22 April 2017.


[9]. Yashaswini Swamynathan, Reuters, The S&P 500 is worth $20 trillion for the first time, business insider,, Feb 13, 2017.

[10]. The last time this happened the market crashed,,

[11].How Henry Walker Eltin imploded,, 02 Feb 2005, accessed 05 May 2017.



[14]. Michael Pento, curve-inversion-and-chaos-to-begin-by-december-2017, Re-Blogged
By Michael Pento – Re-Blogged From PentoPort

[15]. Private Equity firms stuck in brick and mortar retailers,,

[16]. tonytran2015, Can most pension funds last?, ,

Added after Sept 10, 2017:




Can most pension funds last?, posted on December 10, 2016

crystal ball

Signs pointing to an impending crash for small investors, posted on December 16, 2016

crystal ball 2


Your fiat money (Part 2), Your fiat money, Bankers given outrageous incomes by their boards, Signs pointing to an impending crash for small investors, Bankers earn more than interest margin on secured loans.

Click here for my other blogs on polymeraust100dollarsMONEY

Click here go to Divider63D400Home Page (Navigation-Survival-How To-Money).

SUBSCRIPTION: [RSS – Posts], [RSS – Comments]

MENU: [Contents][Blog Image of Contents ][Archives ] [About]

16 thoughts on “Investors beware: Dividend Growth is misleading

  1. I think this is one of the most significant information for me. And i’m glad reading your article. But want to remark on some general things, The site style is wonderful, the articles is really great : D. Good job, cheers|


  2. Unquestionably believe that which you stated. Your favorite reason appeared to be on the net the easiest thing to be aware of. I say to you, I certainly get irked while people think about worries that they plainly don’t know about. You managed to hit the nail upon the top and defined out the whole thing without having side-effects , people could take a signal. Will likely be back to get more. Thanks|


  3. Hello There. I found your blog using msn. This is an extremely well written article. I will make sure to bookmark it and come back to read more of your useful info. Thanks for the post. I will certainly comeback.|


  4. Hey I know this is off topic but I was wondering if you knew of any widgets I could add to my blog that automatically tweet my newest twitter updates. I’ve been looking for a plug-in like this for quite some time and was hoping maybe you would have some experience with something like this. Please let me know if you run into anything. I truly enjoy reading your blog and I look forward to your new updates.|


  5. Most countries are bankrupt by their own design … There debts to income are outweighed by their massive borrowing … But greater still are the huge interest repayments that cannot be met by GDP … This is not declared as bankruptcy as it would alarm people so it’s called .. Shortfall or declared net profit before tax leaving them able to trade and directors receiving massive renumeration in income but not showing true profit … They still award themselves huge bonuses based on productivity/turnover and meanwhile no recourse to investors or shareholders is made … If all the companies declared true profits over loss … Then we would see the real picture of corruption …

    Liked by 1 person

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.