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Jonathan Greenberg of OCE Interactive in Forbes Blog: Cisco Dividend Wise Decision
Sep 24, 2010 (10:09 AM EDT)

Greenberg says dividend paying companies garnering premium

NEW YORK, Sept. 24 /PRNewswire/ -- Jonathan Greenberg, CFA, president and CEO of OCE Interactive, lauded Cisco's decision to begin paying a dividend in his blog post on, Job Well Done, Cisco.  OCE specializes in systematic and expectations research and is the developer of the Market Topographer® platform for researching, benchmarking and comparing the valuation of U.S. stocks.

Greenberg, who writes for the Forbes Great Speculations blog, disagreed with those who questioned Cisco's decision.  Based on the analysis of OCE's Market Topographer platform, he outlined several key points about companies that pay dividends:

  • Companies overwhelmingly start to initiate dividends when their growth slows to around 13.5%, what OCE refers to as the "long term growth threshold."
  • At a 9% to 11% expected EPS growth rate, consistent with Cisco's, dividend payout ratios on average hover around 25%.
  • Since the 2008-2009 financial crisis, the market has been paying an historically above average premium for stocks with higher dividend payout ratios. This premium increased again fairly materially starting in May of this year and has remained at elevated levels, even with a potential tax hike on dividends just around the corner, Greenberg said.
  • Companies that pay dividends, especially those expected to sustain reasonable growth prospects, will have access to a pool of investors "that we expect will grow the fastest of any segment in the coming years, the shell-shocked Baby Boomers," he wrote.

"All else equal, would you rather buy stock of a company expected to grow earnings per share at a rate of 10% a year or of a similar company expected to grow EPS 10% while paying out 25% of its earnings in the form of a dividend?  Is that really a tough decision?" Greenberg concluded.

About OCE Interactive

OCE Interactive is a financial services firm specializing in systematic and expectations research and the developer of Market Topographer® (, a platform for researching, benchmarking and comparing the valuation of U.S. stocks.  Market Topographer combines systematic and expectations research to help investors, advisors, bankers and analysts rationalize a company's valuation with the current and past experience of other companies and the marketplace.  OCE also provides customized research and consulting services for both the buy side and sell side.  OCE was founded in 2003 by a team of former bulge-bracket investment bankers, who spent more than six years developing the Market Topographer platform with the goal of bringing risk management more directly into the valuation process.  Currently, the company has six patents pending on its technology and an extensive pipeline of additional tools for equity valuation and mergers and acquisitions practitioners.  The company is based in New York.

SOURCE OCE Interactive