Dividend Growth 10yr

Dividend Growth 10yr is the geometric average dividend growth rate over the past 10 years, shown as a percentage, for example 3.32%.

 

How it is calculated

The geometric growth rate gives you the typical value of dividend growth over the period by using the product of their values (as opposed to the arithmetic average which uses their sum).

The geometric growth rate is defined as the nth root of the product of n numbers.

For example, suppose a company paid the following dividends:
Year 0 = 1.0
Year 1 = 1.1
Year 2 = 0.9
Year 3 = 1.3

This means the company had dividend growth of 10% the first year, -18.2% the second year, and +44.4% the third year.

What is its average growth rate?

It is not the arithmetic mean of 12.1% ((10%-18.2%+44.4%)/3), because if you add 12.1% to the dividend of 1.0 for three years you get 1.408 which is not correct.

The geometric growth rate is 9.14% which is correct. Because if you grow 1.0 by 9.14% for three years you get 1.3.

We use the geometric mean because it penalises a dividend decline more than the arithmetic mean does.

 

How to use the ratio

Available as a screening ratio: Yes

Available as an output column ratio: Yes (Look for it under the Growth heading)

 

How to select the highest 10 year dividend growth companies

To find companies with the highest dividend growth over ten years set the slider from 0% to 10%.

 

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