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Unformatted text preview: dividends. While the S&P 500 Index had lost 15% in 2001, high dividend-paying companies have yielded positive returns. The dividend yield on many common stocks is higher that the interest rate offered on short term securities. These securities also offer the potential of return in positive gains. 3. What does the comparison of the high dividend-paying stock (J.P. Morgan Chase & Co.) and the high-growth stock (Tyco International Ltd.) reveal? The comparison of J.P. Morgan and Tyco shows that companies that pay higher level of dividends with lower rates of growth can offer similar longer rates of returns. The key is dividend reinvestment. The total return offered by J.P. Morgan matches the return of Tyco in 5 years. The return is matched through the reinvestment of dividends paid....
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This note was uploaded on 09/13/2011 for the course FIN 6301 taught by Professor El-asmawanti during the Fall '09 term at University of Texas at Dallas, Richardson.
- Fall '09