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DOES THE DIVIDEND YIELD MATTER?

There are sports disciplines where everything is more or less clear. For example, track and field: the winner is the first athlete to cross the finishing line, jump over the highest-placed bar, throw a strangely-shaped object furthest. Citius, altius, fortius, says an olympic motto – faster, higher, stronger. If only everything in the world was as simple as that! If only every question could be settled against one criterion which required a simple judgment such as the speed of the race, the height of the bar or the force of the throw! The world would be unbearable, wouldn’t it?

Exactly. Fortunately, the reality is far more complicated than a 100 meter dash.

These sporting analogies suggested themselves to me when I read two very much complementary accounts: the Wprost ranking of the 200 largest companies and another report from the Orły Wprost („the Wprost Magazine Eagles”) award ceremony (so far the awards have been granted in two regions: pomorskie (Pomerania) and zachodniopomorskie (West Pomerania)). The ranking looks at the companies’ revenues while the awards are for the rate of growth (average – in the last three years) and net profits. These are two pictures of the market obtained by reference to different criteria, but they are pictures which are best looked at together rather than separately. However, contrary to appearances, even the combined picture does not provide a full insight.

As it happens, I have recently returned from New York and, having studied the ranking of our largest companies, I have found it difficult to judge the results out of context. At first glance, it is hard to resist the conclusion that the largest Polish companies seem puny beside the global giants, a bit like the Warsaw stock exchange beside the New York stock exchange (see my Warsaw Swings With Sinatra post).

But isn’t this comparison an oversimplified account of reality? We only have to look at other criteria to get a more kaleidoscopic view. The Warsaw stock exchange may turn out to be home to companies which offer investors the same or even better rates of return than companies listed in New York, London or Tokyo. Let’s be honest: a dividend at the level of ten or ten plus per cent is a handsome return (at least for the investors) and it matters not what the longitude and lattitude are where it is paid out. It will take no one by surprise that the Warsaw-listed companies, including ABC Data, do not belong to the largest in the world. But some of them, and this also applies to ABC Data, boast dividend yield on a par with leaders on the world’s best-known stock markets. In other words, a company’s revenues is one thing, but its dividend yield and the money which ends up in the investors’ accounts is quite another. A glance at the highest dividends paid out by the New York stock exchange explains all. It’s a mistake to believe that the biggest player pays the most handsomely.

Another point of view and another, often surprising, picture emerges; one which shows that, fortunately, reality is more complicated than a hurdle race. The olympic motto says: faster, higher, better. Translated into the language of business the message would have to include a larger number of criteria, but each criterion would fit the call: More, more, more … Just the thing, isn’t it? And how true with respect to dividends!

The Wprost Magazine ranking of the 200 largest Polish companies:
http://rankingi.wprost.pl/200-najwiekszych-firm

For more on the Wprost Orły, go to:
https://www.wprost.pl/534306/Nagrody-dla-przedsiebiorczych-i-wyjatkowych-Tygodnik-Wprost-wreczyl-Orly

The Warsaw stock exchange dividends:
https://strefainwestorow.pl/dane/dywidendy/lista-dywidend

The New York stock exchange: the highest dividend payers:
http://www.nasdaq.com/dividend-stocks/
http://www.topyields.nl/nyse-best-dividend-stocks/

The famous Fortune Global 500 – a ranking of the largest companies in the world:
http://fortune.com/global500/

And a ranking of 200 of the largest companies in the world by the Forbes Magazine:
http://www.forbes.com/global2000/

Here yu will find key data about the largest companies in the world:
https://en.wikipedia.org/wiki/List_of_largest_companies_by_revenue

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