PP vs Dividend Growth Investing

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mathjak107
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Fri Feb 14, 2020 1:19 pm

Xan wrote:
Fri Feb 14, 2020 9:03 am
Dividends keep a company's collective mind and priorities on the right thing: making money for stockholders. It's easy for a company that doesn't pay dividends to get wrapped up it itself. Dividends keep a company humble. Dividend companies remember the whole point of being in business: to make money.

My opinion, anyway. My stock allocation is a broad market index that includes many dividend and non-dividend companies, so I'm shielded against being wrong!
i only wish that was true ..unfortunately it has been the dividend payers that have made some of the worst decision with their money and lost tons for shareholders

AT&T paid $100 billion to enter the cable business

AT&T thought it would be a good idea to diversify by paying $100 billion to take on cable company TCI. It was wrong! AT&T broke itself up a few years later and sold off the cable assets.

AT&T tried to elbow its way into the personal computer business with a hostile $7 billion takeover of NCR. It didn't work, and AT&T later spun the company back out at a $4 billion valuation.

Microsoft paid an estimated $500 million for mobile phone company Danger. It was supposed to be working on new phones for Microsoft, but most of the key employees left the company. The end result of the acquisition was the Kin, a social smartphone from Microsoft that totally bombed.

Cisco probably bought Pure Digital, the company that makes the Flip, right at the peak of its value in 2009. Since then high definition video cameras have been built into just about every smartphone making the Flip pretty much worthless in the long run. Which is probably why Cisco killed the $590 million acquisition earlier this year.

After Google bought DoubleClick, Microsoft tried to keep up by buying ad company aQuantive for $6 billion. The acquisition never really worked out. The aQuantive executives left two years after the deal closed and the technology was discarded.
..
AOL-Time Warner is obviously the worst

i can go on and on... This is another myth that just won’t die and keeps getting repeated while it certainly has not been found to be the case and they are just as prone to bad money decisions as any other stock
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Re: PP vs Dividend Growth Investing

Post by Xan » Fri Feb 14, 2020 2:11 pm

Tremendous amount of confirmation/selection bias there.

Regardless, the only point of being in business is to pay the owners a dividend. Everything else is smoke & mirrors.
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Re: PP vs Dividend Growth Investing

Post by vnatale » Fri Feb 14, 2020 2:45 pm

Xan wrote:
Fri Feb 14, 2020 2:11 pm
Tremendous amount of confirmation/selection bias there.

Regardless, the only point of being in business is to pay the owners a dividend. Everything else is smoke & mirrors.
The "only"? Professional sports teams are businesses and I have a sense for many of them that the increase in the value of their franchises exceed the amount of annual earnings. Teams that lose money seem to still go up in value.

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Re: PP vs Dividend Growth Investing

Post by Xan » Fri Feb 14, 2020 2:58 pm

vnatale wrote:
Fri Feb 14, 2020 2:45 pm
Xan wrote:
Fri Feb 14, 2020 2:11 pm
Tremendous amount of confirmation/selection bias there.

Regardless, the only point of being in business is to pay the owners a dividend. Everything else is smoke & mirrors.
The "only"? Professional sports teams are businesses and I have a sense for many of them that the increase in the value of their franchises exceed the amount of annual earnings. Teams that lose money seem to still go up in value.

Vinny
That may well be true, but they are also turning out cash. And any increase in value is based on the amount of cash they can turn out for new prospective owners. It all comes back to dividends.
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Fri Feb 14, 2020 3:01 pm

Dividends with out appreciation in share price is a poor return ...in the end it is only about total return no matter how it is arrived at. ..a good stock is a good stock.

The blue chip graveyard is filled with dividend payers who paid right up until they fell in the grave ..so paying dividends and profits are very different. ..stocks pay dividends even when losing money.. dividend payouts are decided on buy a board whether there are profits or not ...many times they keep paying well after the stock is headed for that graveyard.

So it is only about total return no matter how it is arrived at
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Re: PP vs Dividend Growth Investing

Post by Xan » Fri Feb 14, 2020 3:11 pm

mathjak107 wrote:
Fri Feb 14, 2020 3:01 pm
Dividends with out appreciation in share price is a poor return ...in the end it is only about total return no matter how it is arrived at. ..a good stock is a good stock.

The blue chip graveyard is filled with dividend payers who paid right up until they fell in the grave ..so paying dividends and profits are very different. ..stocks pay dividends even when losing money.. dividend payouts are decided on buy a board whether there are profits or not ...many times they keep paying well after the stock is headed for that graveyard.

So it is only about total return no matter how it is arrived at
Even if a company is going down, I certainly want it to keep paying me right up until it goes out of business. Wouldn't you?

Like with the sports teams, any value increase in a stock is because somebody believes in the future it will be able to pay a big dividend. Ultimately, there's no other reason to own a stock.

Edit: I'm not disagreeing that total returns are what matter. I suppose I'm disagreeing with the complete dislike of dividends from earlier. And mainly I'm pointing out that everything, ultimately, boils down to dividends.
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Fri Feb 14, 2020 3:22 pm

No , because every dollar paid out is merely subtracted off the value of the stock ..it is mandatory....the more they pay with a sinking share price the more the sinking just takes the dollars you got out of the other pocket ....regardless I would sell a poor investment .

A dividend is neutral , it is no different than a mutual fund dividend ...you have x amount and go to sleep , it goes ex div and the price is reset .. you have less dollars left compounding going forward and a dividend in pocket ....if you sold the same dollars before it went ex div you would have the same amount invested and same money in pocket .

It is a wash .
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Re: PP vs Dividend Growth Investing

Post by Xan » Fri Feb 14, 2020 3:24 pm

mathjak107 wrote:
Fri Feb 14, 2020 3:22 pm
No , because every dollar paid out is merely subtracted off the value of the stock ..it is mandatory....the more they pay with a sinking share price the more the sinking just takes the dollars you got out of the other pocket ....regardless I would sell a poor investment .

A dividend is neutral , it is no different than a mutual fund dividend ...you have x amount and go to sleep , it goes ex div and the price is reset .. you have less dollars left compounding going forward and a dividend in pocket ....if you sold the same dollars before it went ex div you would have the same amount invested and same money in pocket
Well, the only reason you can sell a stock at all is because somebody believes that one day it will pay a dividend.

Since you're now arguing that dividends are neutral rather than bad, I think we're largely in agreement.
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Fri Feb 14, 2020 3:37 pm

Nonsense ..., stocks are sold daily that do not nor ever will pay a dividend ...

The problem is most people have no clue how dividends work ...they think they are like interest and go on top of what you have ... nay nay ...dividends are no different than pulling the equal dollars from a portfolio..a 4% dividend is the same as pulling the same dollars from a portfolio of non div payers ...you will have the same income and same balance left for markets to compound on at the ring of the bell assuming the same total returns on both ...

They both need the same appreciation to stay solvent..market total returns don’t care how they are arrived at.

Dividends are not good or bad ...stocks and investments are good or bad.

The only thing bad about dividends is they are not tax efficient since that 4% dividend is taxed on all 4% . The same 4% draw from a portfolio of non div payers is taxed only on the gain portion....also dividends are tough to control ...I could not get an aca subsidy because I couldn’t control the dividend flow with out selling accomplishing nothing....

So one has to very careful with dividends if tax efficiency is a factor
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Re: PP vs Dividend Growth Investing

Post by Xan » Fri Feb 14, 2020 3:57 pm

mathjak107 wrote:
Fri Feb 14, 2020 3:37 pm
Nonsense ..., stocks are sold daily that do not nor ever will pay a dividend ...
If a stock really, truly were guaranteed that it would never, ever pay a dividend, then it would be worthless. Nobody would ever want to buy it. What would be the point? Why would anybody buy a company that couldn't ever distribute profits to the shareholders?

I stand by my claim: the only reason any stock has value is because it might pay dividends in the future. When you sell a stock, the buyer wants it because of that. Note that I mean, he ultimately wants it because of that. Maybe he himself doesn't expect a dividend, but the person who will buy it from him will. And on down the line. The dividend potential is the only reason a stock has value.
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Re: PP vs Dividend Growth Investing

Post by mathjak107 » Fri Feb 14, 2020 4:08 pm

Well capital appreciation is the only way stocks grow , there is no other way .....if it does not pay a dividend then create your own ......you can create your own cash flow off an appreciating non div payer ...we do it all the time in retirement ....either the company sells off a piece of your share value and hands it to you or you can see the same dollars yourself selling off equal value in shares ...either way lasts as long ,has the same balance and same income assuming same total returns

So investors make no money with Berkshire or any other non div payer ? It would be very foolish to think that ......
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Re: PP vs Dividend Growth Investing

Post by Xan » Fri Feb 14, 2020 4:11 pm

mathjak107 wrote:
Fri Feb 14, 2020 4:08 pm
Well capital appreciation is the only way stocks grow , there is no other way .....if it does not pay a dividend then create your own ......
You "create your own" by selling to someone who (ultimately) expects a dividend.
mathjak107 wrote:
Fri Feb 14, 2020 4:08 pm
So investors make no money with Berkshire or any other non div payer ? It would be very foolish to think that ......
As a whole, in fact, no they haven't. Take everybody who has ever lived and add up the amount they've spent buying Berkshire and the amount that they've gotten from selling Berkshire, and the total is zero dollars.

One day, if and when the stock pays a dividend, then that amount will be more than zero.
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