Do the index returns include dividends?
Answer
Yes, privateMetrics index calculations do factor in dividends. Ignoring dividends will provide an incomplete picture of private company performance, especially for private companies, where controlling shareholders such as private equity can have a larger say in payouts.
Things to Consider
Dividend payouts are estimated by modelling payout ratios of private companies with aggregate economic data. Using data on corporate payouts and profits, we adjust them for the dividends paid by publicly listed companies. Sectoral profit contributions are then used to predict a sector-level payout ratio, which is then applied on each individual company’s net income to arrive at dividends.
Our return calculations thus add the cash yield available from dividends to the price returns estimated by our models to arrive at total returns – thus providing a complete picture of private company performance.