Dividends as a contributor to the total returns of South African equities over the long-term

Mahura, Kagisho (2007-03)

Thesis (MBA)--Stellenbosch University, 2007.

Thesis

ENGLISH ABSTRACT: When considering the expected returns from an investment, investors often focus on the appreciation of the share price (capital appreciation) and ignore the contribution of dividends paid, thus overlooking a potentially significant contributor to returns. The objectives of this study are to determine the respective contributions of dividends and capital appreciation to the total returns of South African equities over a 10-year period, beginning 31 July 1996 and ending 31 July 2006, by using the Top 40 index of shares listed on the Johannesburg Securities Exchange over that period. The study also aims to determine whether dividend policy should be considered as carefully as the share's potential capital appreciation by investors when constructing portfolios. The study determined that dividends paid contributed more than 50% of the total return for 10% of the shares in the sample tested. In total, dividends contributed more than 25% of the total return for 33% of the shares. The study also concludes that a share's dividend policy should be considered carefully, as dividends paid may be a significant contributor to a share's expected return.

AFRIKAANSE OPSOMMING: Wanneer die verwagte opbrengste van 'n belegging in ag geneem word, Ie beleggers dikwels klem op die waardestyging van die aandeleprys (kapitaalappresiasie) en ignoreer die bydrae van dividende wat betaal word. Hulle sien nie dividende as 'n potensieel belangrike bydraer tot opbrengste raak nie. Die doelwitte van hierdie studie is om die onderskeie bydraes van dividende en kapitaalappresiasie tot die totale opbrengs van Suid-Afrikaase aandele oor 'n tydperk van 10 jaar - vanaf 31 Julie 1996 tot 31 Julie 2006 - te bepaal deur die Top 40 indeks van aandele te gebruik wat in daardie tydperk op die Johannesburgse Aandelebeurs genoteer was. Die ondersoek wil ook bepaal of beleggers net so versigting na dividendbeleid as na aandele se potensiele kapitaalappresiasie behoort te kyk wanneer portefeuljes saamgestel word. Die studie het bepaal dat dividende wat betaal is, meer as 50% van die totale opbrengste vir 10% van die aandele in die toetsvoorbeeld uitgemaak het. Dividende het altesaam meer as 25% van die totale opbrengs vir 33% van die aandele uitgemaak. Die studie het ook tot die gevolgtrekking gekom dat 'n aandeel se dividendbeleid baie versigtig oorweeg moet word omdat dividende wat betaal word 'n belangrike bydraer tot 'n aandeel se verwagte opbrengs kan wees.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/70661
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