Hello Danguee
Thanks for your interest in the article.
TMF, I think you owe it to your readers to give an equivalent annual compound growth rate not a fake simple-arithmetic-for-beginners rate.
I don't think it would be accurate to give a compound growth rate in this case.
In order to compound, the dividend payments would need to be retained by the company until the end of the period, to my mind.
The paid out dividend money will no longer be working for the investment, so the dividends will be generated on the initial capital only and not on the initial capital plus the retained dividends.
An investor could calculate his or her compound annual growth rate on an investment at its conclusion, including dividends received, but it's inappropriate to suggest what that might be in advance because of the unknown future value of the initial capital investment due to share price movements.
What's proposed is a regular payment, so the article's 'income' approach seems the best method to present it and will be familiar to investors used to considering potential dividend yields.
That's how I see it anyway.
Good luck if you decide to invest in Persimmon, but I think we should all bear in mind alarmbell's cautionary note, above.
Best,
Kevin
