[MrPowers]

The biggest factor influencing long term stock returns in real growth in earnings.

Companies don't pay out all profits to shareholders as dividends. They can also reinvest in their own business (e.g. build a new factory) or buy back shares.

The go-forward nominal rate of return on stocks should be higher than the inflation rate + the dividend yield. The nominal rate of return could be closer to shareholder yield + inflation (shareholder yield is the dividend yield + share buybacks). I think the real earnings growth is the best predictor of long term returns. Earnings growth is correlated with population growth & productivity growth, but those aren't the only important variables.

[throw8383833jj]

Look at it this way. In the forever long term, stock valuation (without dividends) can't exceed the GDP growth curve. Otherwise the warren buffet ratio would be meaningless. So what is GDP growth? It's population growth plus productivity growth. everything else just is just productivity growth. Sure, stocks can increase their earnings as a larger percentage of gdp, but that is also finite and will in the long term still fit the GDP growth curve.

So if Pop growth and productivity growth are 0 in the long term (it might be higher i don't know), GDP is Inflation. if GDP is inflation then equity returns without dividends is inflation as well.