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Unformatted text preview: gs 1.81% 76.39% 0.43% 3.80% NorthWestern Corp. 3.74% 78.40% 0.81% 2.70% Redwood Trust Inc 5.35% 79.25% 1.11% NA The fundamental growth rates are low for every one of the firms, partly because these firms
have high payout ratios and partly because of low returns on equity on their investments.
For those firms where analyst estimates of growth are available, the expected growth rates in
earnings per share over the next 5 years are low. In fact, if you require firms to have
expected fundamental growth rates of 3% or higher, the only three firms that make the final
cut are two real estate investment trusts – Mission West Properties and Koger Equity- and
one tobacco firm – Advanced Tobacco. In summary, screening firms for sustainability of
dividends and for reasonable growth rates in earnings reduces the original sample of 100
firms to 3 firms.
As has often been said, the only two things that are certain in life are taxes and
death. While investors may get a chance to pause and admire the pre-tax returns they make...
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- Spring '11