I have been reading a book written by John C Bogle. One of his quotes is:
The reality is that the fundamental return, the dividend yield plus the earnings growth of companies
I'm trying to understand what is this actually.
First, I understand that dividend yields are the dividends you receive each year. Over a period of 'n' years, you can add all the dividends to have received and divide them by 'n' to calculate the yearly amount. I get that.
However, I don't understand at all what
earnings growth of companies mean. Is that the growth on the stock market price of a particular stock or bond, over a particular period of time?