Jim Devine wrote:
>I was fiddling around with my spread-sheet this morning, trying to
>get my mind in gear (funny what economists do!). I noticed that the
>ratio of dividends to earnings on the NY stock exchange not only has
>shown a general mild downward trend since 1959, but has shown a
>steep fall between 1992 and 2000 (more than 50%). (This ratio rose
>from the late 1970s until 1992, which represents the peak in the
>Council of Economic Advisors data I had available. A milder fall in
>the dividend/earnings ratio occurred between 1959 and 1974 or so.)
>
>Is a fall of the dividends/earnings ratio a good measure of rising
>speculation on stocks? After all, aren't earnings that don't
>correspond to dividends capital gains?
Earnings = corp profits? If that's your meaning, then there's no
guarantee that undistributed earnings will be translated into cap
gains. In recent years, firms have replaced dividends with buybacks,
which don't show up in the CEA figures.
By the way, the jargon for what you're talking about is the payout ratio.
Doug
