Let’s look at the two scenarios for an investment of €100,000 over a 10-year period. Assumptions: Dividends are reinvested back into the same company (by buying more shares), which is key to maximizing compound interest returns. For simplicity, we assume that the stock price increases at the same growth rate each year. 💰 Scenario 1: Yield and Moderate Growth (5% Dividend + 4% Growth) Parameter Value Initial Investment €100 000 Annual Share Growth 4% Annual Dividend 5% Total Annual Return 9% (upon reinvestment) Term 10 years After 10 years: The value of the investment, if the total return is 9% (with full reinvestment of the dividend): $$PI \times (1 + P + D)^T = €100,000 \times (1 + 0.09)^{10} $$$$\approx **€236,736**$$ Focus: This company is more suitable for investors looking for a more stable current income and lower risk. Dividends provide a faster return on capital and a potential buffer in case of a dec...
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