Discounting Dividends

Why short-term recessions typically have little impact on long-term investments

Presented by Tom Connelly, CFA, CFP, and Logan Robertson

In a new video, Tom Connelly explains, “classical finance imparts that stock market valuation is a function of receiving annual dividends over a long period. Dividends received in the future are worth less than a dividend received today; however, dividends also grow over time.

The bulk of today’s stock market valuation is due to dividends that will be paid in the future. Because a recession may only affect dividends received over the next few years, long-term investors should not be concerned about the effect of garden-variety recessions on long-run stock returns.”

Tom Connelly, CFA, CFP, is the president and chief investment officer at Versant Captial Management. He describes his most significant professional accomplishment as “the growth and preservation of my clients’ financial nest eggs and legacies over lifetimes through one or more recession events.”

Logan Robertson is a client associate and a member of the investment team at Versant. He works with the firm’s wealth counselors to develop and deliver planning and investment analysis to help our clients build and preserve their wealth.

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