“Hey Brett, what do you think of telecom?”
“Well, let’s take Verizon (VZ). It pays a 5% dividend. It’s growing that dividend by about 2% or so per year. So I’d expect the stock to return 7% or so in the years ahead,” I replied.
“What about profitability metrics like return on invested capital (ROIC)? Or margins? Or…?” my investor friend rebutted.
“If it doesn’t flow through to a higher dividend, then it doesn’t really matter.”
I was “grilled” with many thoughtful dividend-related questions while speaking to subscribers and fellow income hounds at Denver’s AAII (American Association of Individual Investors) chapter last week.…