In part 1, we started looking at the relationship between dividend yields and interest-rate sensitivity. In this part, we dive deeper by connecting the dots with companies’ fundamentals.
Sorting on Size
To better understand the relationship between dividend yields and interest-rate sensitivity, we need to connect the dots with companies' fundamentals. Dividends are often a sign of maturity. As companies progress through their life cycles, their growth slows and reinvestment needs decline, allowing them to distribute more cash. Using market cap as a proxy for maturity, this evolution is evident.
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