Revenue is the driver for both earnings and cash flow. There can be long term problems if earnings and/or cash flow growth is higher than the growth in revenue. You can have lower growth in revenue than in earnings and/or cash flow for a long while sometimes, but eventually, either revenue growth will have to equal earnings and/or cash flow growth.
What can happen is the company can grow their revenue. If this cannot happen, then the growth in earnings and/or cash flow will have to slow to the growth in revenues.
Dividend growth is tied into this also. Dividends can sometimes outgrowth EPS and/or CFPS, but this also cannot go on forever. Either a company will have to increase EPS and/or CFPS or lower the growth in dividends.
On dividend growth companies on a long term basis, the stock price growth will keep pace with the growth in dividends.
On my other blog I am today writing about Wajax Corp. (TSX-WJX, OTC-WJXFF) .. continue...
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