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Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 2:11 pm
by Xan
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.

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 2:45 pm
by vnatale
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

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 2:58 pm
by Xan
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.

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 3:01 pm
by mathjak107
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

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 3:11 pm
by Xan
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.

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 3:22 pm
by mathjak107
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 .

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 3:24 pm
by Xan
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.

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 3:37 pm
by mathjak107
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

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 3:57 pm
by Xan
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.

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 4:08 pm
by mathjak107
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 ......

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 4:11 pm
by Xan
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.

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 4:12 pm
by mathjak107
Your logic makes no sense.. growth funds in etf’s , shouldn’t exist by your logic

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 4:20 pm
by Xan
mathjak107 wrote:
Fri Feb 14, 2020 4:12 pm
Your logic makes no sense.. growth funds in etf’s , shouldn’t exist by your logic
Suppose you were the only investor in the world. Is there any reason to buy a stock that doesn't pay a dividend? No. You don't make any money until a dividend is paid.

Now expand that to however many investors there really are. As a whole, just like the lone-investor scenario above, they don't make money until a dividend is paid. The sum total made by the investors is zero until there's a dividend, as I described earlier with the Berkshire example. Do you disagree?

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 4:26 pm
by mathjak107
That is a silly analogy ..if I was the only investor in the world with no stock appreciation all that would happen is they are handing me back the invested dollars I gave them ...without other buyers to bid the stock up there is zero return .

I have a feeling you do not understand that the paying of a dividend is a zero sum event ...they are giving you back not profits but your invested dollars .....

It is mandatory that what ever your stocks value is before it goes ex div that the value of your invested dollars is reduced by an equal amount ...what gets compounded on by markets is that much less once it trades again ..there is nothing gained or lost by you getting that dividend ...you could have sold off the same dollars yourself pre ex div and would be in the same spot

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 4:29 pm
by Xan
mathjak107 wrote:
Fri Feb 14, 2020 4:26 pm
That is a silly analogy ..if I was the only investor in the world with no stock appreciation all that would happen is they are handing me back the invested dollars I gave them ...without other buyers to bid the stock up there is zero. Return
But taken as a whole, investors are doing exactly that, just passing the same thing around among themselves, with a net gain of $0. Until there's a dividend.

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 4:31 pm
by mathjak107
Wrong ....right up until it goes ex div I can sell the same dollars off and be in the same position..I don’t need them to hand me back a piece of my invested dollars to make investing worth it .

All stocks need the same appreciation to survive or grow and any can spin off cash flow off that appreciation

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 4:34 pm
by Xan
Nope, selling is just passing the same thing around. The investors, as a whole, are still up exactly $0.

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 4:41 pm
by mathjak107
Nonsense .

I can have a portfolio of non div payers and draw 4% off it ......that is no different than a 4% dividend ....

In the. Case of the dividend if that stock Is flat once it is reduced than your return is zero and you have less dollars compounding going forward

If my portfolio is flat after pulling out the same dollars representing 4% than my return is zero and I have less invested going forward


It is the identical end result.. if both saw 4% appreciation then both returns are the same 4%

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 4:43 pm
by Xan
You're only up because someone else is down. The investors as a whole have made zero from owning the stock.

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 4:47 pm
by mathjak107
Xan wrote:
Fri Feb 14, 2020 4:43 pm
You're only up because someone else is down. The investors as a whole have made zero from owning the stock.
wrong again ..STOCKS ARE NOT A ZERO SUM GAME .

i can buy a stock and sell it to you at a profit , you sell it to the next guy at a profit , he makes a profit and he sells it .. we can have hundreds of investors making money and banking it all off my one purchase. to think stocks are a zero sum game is false .

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 4:49 pm
by Xan
mathjak107 wrote:
Fri Feb 14, 2020 4:47 pm
Xan wrote:
Fri Feb 14, 2020 4:43 pm
You're only up because someone else is down. The investors as a whole have made zero from owning the stock.
wrong again ..STOCKS ARE NOT A ZERO SUM GAME .

i can buy a stock and sell it to you at a profit , you sell it to the next guy at a profit , he makes a profit and he sells it .. we can have hundreds of investors making money and banking it all off my one purchase
Until there's a dividend, they are indeed zero sum.

Take my example from earlier: add up all the money everybody has ever spent on Berkshire stock, and all the money they've ever received for it. It is exactly zero. Do you agree?

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 4:50 pm
by mathjak107
whether you create your own cash flow by selling the equal dollars from a non div portfolio or they sell off a piece of your share price is irrelevant .
here is a perfect example ... on dec 11th if you had 10 shares of this you had 57.41 x 100 shares = 5741 for markets to compound on ..
the stock went x div and handed you back roughly .47 cents .

when the stock opened the next morning it was reduced to 56.96 so now you have 5696. compounding for you plus the dividend in pocket ... that is the same 5741 you had before the dividend .

so if you reinvest the 47 dollar dividend you will buy in at the reduced price of 56.96 giving you more shares but the same 5741 for markets to act on .
if the stock did not pay the div out and went up 5% the next day you have 5741 x 1.05 = 6028.05

if the stock paid a dividend and you did not reinvest , you have 5696 x 1.05 = 5980.80 or less then you would have had if no div was paid .
if you reinvest then you have more shares worth the same 5741 x 1.05= the same 6028 working for you .

DIVIDENDS BEHAVE LIKE STOCK SPLITS . THEY MERELY SWITCH AROUND EXACTLY WHAT YOU HAD .

they cushion nothing in a down market -period . this is a myth that won't die ...the stock may hold up better because RISING dividends are a sign of health but that has nothing to do with the stock doing any better from the mechanics of that dividend . the stock is still solely dependent on appreciation to gain a penny .

all your gains are based on total return and all that counts is dollars invested x the percentage up or down ... number of shares is irrelevant .

Image

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 4:52 pm
by mathjak107
Xan wrote:
Fri Feb 14, 2020 4:49 pm
mathjak107 wrote:
Fri Feb 14, 2020 4:47 pm
Xan wrote:
Fri Feb 14, 2020 4:43 pm
You're only up because someone else is down. The investors as a whole have made zero from owning the stock.
wrong again ..STOCKS ARE NOT A ZERO SUM GAME .

i can buy a stock and sell it to you at a profit , you sell it to the next guy at a profit , he makes a profit and he sells it .. we can have hundreds of investors making money and banking it all off my one purchase
Until there's a dividend, they are indeed zero sum.

Take my example from earlier: add up all the money everybody has ever spent on Berkshire stock, and all the money they've ever received for it. It is exactly zero. Do you agree?
no , because as i explained equities are NEVER a zero sum game. potentially we all can be winners. all we need is a buyer for each share , that is all that is required and no one has to be a loser . options are a zero sum game , not stocks .

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 5:01 pm
by Xan
Won't you take my Berkshire challenge? What, mathjak, is the grand total all investors have made from owning Berkshire? If it's other than zero, please explain how.

Re: PP vs Dividend Growth Investing

Posted: Fri Feb 14, 2020 5:07 pm
by mathjak107
i just told you ... if i bought berkshire day one and sold it to you at a profit , you held it a while and sold it to the next guy at a profit , he sells it at a profit to someone else and it repeats over and over .. today there may be no one who ever sold that share at a loss in theory ..... hundreds of us could have made money off that one share ..

stocks are not zero sum .