A Dividend-Based Strategy For The Year Ahead
Graham and Dodd viewed stocks as special cases of bonds. That is, they bought stocks for their dividends, rather than for potential capital gains. There was, however, one noticeable difference between stocks and bonds. The former carry an inflation fighter in the form of potential rises in the dividend, whereas the latter represent a fixed income stream. Put another way, stocks were likely to maintain their purchasing power in real terms, meaning that an investor could afford to spend all of the income. Meanwhile, the purchasing power of bonds had to be replenished FROM income; not all of the ...