Before closing the office for the holiday season break, we sent out a final piece of communication to our clients with a report we completed looking at Australian share income as compared to income received from cash over time.
Over time there are two benefits that we hope to receive from investing in shares. The first is that we hope that the shares we own will go up in value over the long term. As a statement of the blindingly obvious, this has not been happening in the short term. The second benefit that we hope to receive from owning shares goes to the ?first principles' of what shares are. Investing in shares means that we become a part owner of a company. That company earns some income, and each year a portion (on average about 60% to 70%) of that income is paid out to investors in the form of dividend.
The simplest analogy is to think of owning shares somewhat like owning an investment property. Over the long term you hope/expect that the property goes up in value - however you also receive income from that property in the form of the rent that the tenant pays. Over time the rental income will tend to increase - just as over time the dividends paid by shares tend to increase.
This report looks at the reliability and quality of income paid by shares over long periods of time. The results of the report are quite compelling and clearly show the benefit of owning shares as opposed to cash in terms of the income produced over the long term.
We have now uploaded this report on to our website and encourage you to take a look - The Benefit of Australian Share Income Over Time.