TCM research show positive relationship between paid out as dividend and future profit growth
For a long time research supposed that the relationship between the pay-out ratio (the percentage of the profit that is paid out as dividend) and future profit growth is negative.
But when Arnott and Asness (2003) first examined the US stock market over a 130-year period based on real-world data, the opposite trend was suddenly found.
Now, TCM - Trustus Capital Management is the first in this research field to initiate a study into the relationship between dividend payments and future profit growth within Emerging & Frontier markets. This was carried out by Idan Isvoranu as a graduation project at the University of Groningen and concluded that the positive correlation found by Arnott and Asness (2003) also applies to these markets.
Read the full blog article here