Which types of companies would you expect to distribute a relatively high or low proportion of current earnings and which would you expect to have a relatively high or low price earnings ratio ?

Answer 1

Regarding distributions of corporate earnings it will depend less on the type of company than on the financial position and future plans of the company. Distributions to shareholders will increase stock value in some cases, and there are tax consequences to distributions as well as cash flow considerations. Historically, computer and technology companies as well as consumer staples companies have yielded the highest distribution return.

Regarding the price earnings ratio there are a number of factors to consider, and market/investor attitudes will often dictate how the PE ratio values current earnings. There isn't so much a specific type of company that will have a high or low PE ratio as this is based on general investors' consensus about the price of an individual company's stock. High PE ratios could indicate a stock is overvalued, but could also indicate an expectation of high future growth.