Earnings and expected returns

  • Lamont O
  • 114

    Readers

    Mendeley users who have this article in their library.
  • 209

    Citations

    Citations of this article.

Abstract

The aggregate dividend payout ratio forecasts excess returns on both stocks and corporate bonds in postwar U.S. data. High dividends forecast high returns. High earnings forecast low returns. The correlation of earnings with business conditions gives them predictive power for returns; they contain information about future returns that is not captured by other variables. Dividends and earnings contribute substantial explanatory power at short horizons. For forecasting long-horizon returns, however, only (scaled) stock prices matter. Forecasts of low long-horizon stock returns in the mid-1990s are caused not by earnings or dividends, but by high stock prices. CR - Copyright © 1998 American Finance Association

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document

Authors

  • Owen Lamont

Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free