The Misplaced Mania Over Dividend-Paying Stocks [View article]
Even those who acknowledge downward stock price pressure on the ex-dividend date see that as a temporary phenomenon which dissipates over the next few days and weeks as other factors effect the stock price. Apparently, a more effect argument is the effect on a company's finances as it pays out each dividend. It winds up with less cash (= less interest income) and/or more debt (=higher interest expense). Of course, given today's low interest rates, the negative effect on net income is not as large as during a more normal interest rate environment. But an effect on income and the balance sheet cannot be denied.
The Misplaced Mania Over Dividend-Paying Stocks [View article]
Clearly, some companies with lots of cash have wasted it. Others have used it to make wise investments. And managements of dividend paying companies which are strapped for cash can always tap the debt markets to fund their ideas, good or bad. Indeed, AT & T, whose dividend is an extremely high portion of their income, just abandoned their $39 billion plan to take over T-Mobile. I'm not saying that the proposed takeover was good or bad, but it would have been a huge transaction. Abandoning it cost them about $4 billion. Yet, AT & T just raised its dividend. So, the dividend does not necessarily restrain management. I just don't think you can generalize either way on this issue.
The Misplaced Mania Over Dividend-Paying Stocks [View article]
I have responded, below. I do thank you for your interest and was pleased to see an open-minded willingness to consider further explanations of my views, rather than just using this comment string as a forum for bashing.
The Misplaced Mania Over Dividend-Paying Stocks [View article]
I believe that many commenters have mischaracterized what I have written. I was not attacking those individuals who buy dividend-paying stocks. After all, the dividend is part of total return. I just do not consider it to be a "free lunch." If you don't believe that paying a dividend subtracts value from the stock price, check what happens on the ex-dividend date to the stock price of companies that declare large special dividends, like The Limited (LTD) about a month ago. Daily volatility of stocks is so high, lately, that it is hard to notice what used to be the normal stock price drop on the ex-dividend date. Years ago, when stock prices were in our daily newspapers and dividend yields were high and daily volatility was low, the newspapers would put an "X" right after the listing of all stocks on their ex-dividend date so that investors could clearly see that the decline that day was largely due to it being the first day of trading without qualifying for the most recently declared dividend. Today, daily volatility is so great and quarterly dividends are so small that we can only see this clearly when large special dividends are declared.
I agree with jacob212 who, in an earlier comment, raised the question of what would happen to the stock price of Apple if they declared a very large special dividend. Nobody responded to the question he raised. And he was being conservative. By now, Apple probably has over $80 per share in cash. Wouldn't the stock trade lower on the ex-dividend date if they declared an $80 special dividend? And wouldn't the stock be less attractive with their cash horde gone?
That being said, several of the commenters have noticed that I disclosed my holding of Microsoft. Early in my article, I wrote that Microsoft's paying a dividend and increasing it over time is beneficial to investors because the company is not using its increasing cash fortune. The same might actually be true for Apple ! Their excess cash is building up much faster that they are spending it, even as they are expanding rapidly. Unless they plan to make a large, wise acquisition, initiation of a dividend would probably benefit shareholders, as would a share buyback.
Many dividend-paying companies carry debt on their balance sheet. Had they paid lower dividends, they would need to borrow less and would have lower interest payments to make, and net profits would be higher. Wouldn't the higher net profits enable the shares to command a higher stock price?
I do recognize that receiving regular dividends can be a great convenience for investors who desire cash income from their portfolio. I just view the dividend as being part of the overall total return and not a "free lunch" extra. Therefore, although my portfolio contains several dividend payers, including several mentioned by the commenters above, I do not choose to select stocks based on their dividend payout policies. And that was the main point I was trying to get across in my article. Many thanks to all for your comments.
Money Growth, Inflation And the Economy [View article]
Thank you for your excellent question. We cannot conclude that mutual fund flows have any particular impact on M2. Presumably, some portion of the money from fund withdrawals is directed toward M2 destinations, such as savings accounts or retail money market funds. But, we have to look at the other side of these transactions, too. As investors withdraw from mutual funds, those funds must sell shares of stock to fund the withdrawals. As stock is sold, the buyers must pay for their purchases, drawing down a variety of sources, including some M2 sources, like savings accounts and retail money market funds. There is no way to follow these flows to calculate whether the net effect on M2 of these transactions is either positive or negative.
Harris & Harris to Benefit From Solazyme IPO [View article]
Nope. The $14 million figure represents management's estimate of the approximate increase in value, after applying a reduction of 20%, due the the fact that their shares are subject to a 180 day lock-up period during which they cannot be sold. That reduction in valuation of TINY's Solazyme shares disappears gradually over the 180 days after the IPO. So, the current $23 million value will roughly double to $46 million, less 20% = $37 million, which is a $14 million increase, initially. TINY's holdings of Solazyme will regain the 20% ($9 million) valuation haircut gradually over the 180 days, plus or minus any change in Solazyme's stock price.
Not a problem - it is not intended for use in windshields. Looks like first use by an auto manufacturer will be as an option for the sunroof in the 2012 Mercedes SLK. The driver will be able to control the sunlight (and resulting heat) coming through the sunroof, electronically. When the car is parked overnight, turning off the juice will darken the sunroof, automatically. Daimler plans to introduce the 2012 SLK at the Geneva Auto Show in March. They may also show it later this month (January) at their celebration of the 125th birthday of the automobile. Disclosure: I am a shareholder.
Research Frontiers: Questionable Prospects Not Holding Back Stock [View article]
There are indications in the blogosphere that the introduction of the 2012 SLK may be postponed to the closing days of January at Daimler's celebration of the 125th Birthday of the Motor Car in Stuttgart. Whether Daimler picks the Detroit Auto Show or the 125th Birthday, January, 2011 will see the introduction of the 2012 SLK. Spreading awareness of REFR's technology being the basis for the new SLK's dimmable sunroof is likely responsible for the recent sharp run-up in REFR's stock price.
Research Frontiers: Questionable Prospects Not Holding Back Stock [View article]
Update: Same day as this blog article was written (November 18), Daimler announced that the new SLK will be introduced in January, 2011. Anticipation of this news could be the factor driving the stock price higher, recently. Here is the link media.daimler.com/dcme...
Research Frontiers: Questionable Prospects Not Holding Back Stock [View article]
It looks like the 2012 Mercedes SLK will have REFR's technology in its dimmable sunroof as an extra-cost option. Neither Daimler nor Research Frontiers has confirmed this, but Daimler's description of the technology matches that of REFR's Suspended Particle Device. Here is the link to Daimler's April, 2010 description of what it calls Magic Sky Control: media.daimler.com/dcme... In recent months, various automotive blogs have confirmed that Magic Sky Control will be an option on the 2012 Mercedes SLK, which is expected to be introduced in June, 2011. The recent 10-Q shows REFR's nine month loss to have been $3.1 million on $425,942 fee income from licenses. The SLK will provide the first major marketing success for REFR if consumers prove willing to pay for the ability to adjust the sunlight (and heat) coming into their cars. If so, huge profits likely will follow as Suspended Particle Device technology is adopted for sunroofs in other car models and higher sales volumes drive costs down. Acceptance in the automotive market will spur sales in the markets for aircraft and architectural glass, which have been proceeding at a slow pace up to now. At this time, REFR stock is suitable for aggressive speculators, only. Disclosure: Long REFR stock
Time to Start Rooting for a Greek Default [View article]
I think Greece will do all it can to avoid exiting the Euro. Let's try to imagine the unintended consequences of Greece announcing that it will abandon the Euro. Right now Greek citizens' bank deposits are in the form of Euros. Any preparations in advance of dropping the Euro would cause many depositors to pull their funds out of Greek banks to avoid their funds being devalued upon conversion to whatever new currency would be created. The ensuing run on the banks would then cause a new credit contraction in Greece's private sector as banks desperately call in loans, since their deposit base supporting those loans would have been eroded by massive withdrawals. So, pulling out of the Euro is not a viable choice for Greece under current conditions. It would send a torpedo into their already crippled economy.
Return to Normal: 15 Month Bond Interest Rate Forecast [View article]
Nope, I did not write that M2 "will explode." I said that it would "increase noticeably once bank lending expands." You are correct that bank loans are not separately counted as part of the money supply. But increased bank lending does tend to expand the M2 supply of money in the economy. Thank you for your comment.
Return to Normal: 15 Month Bond Interest Rate Forecast [View article]
Current pricing of the June, 2011 futures contract on the 10 - Year Note implies an interest rate of approximately 4.55% at that time, which also implies returning toward the mean. My forecast of 4.72% for this rate 15 months from now is a bit more bearish. The forecast values for the other rates here are based on a "return to normal," of spreads relative to the 10 - Year Note rate.
Arnold Landy's Highest Conviction Pick: A Focused, Deepwater Drilling Leader [View article]
True, but they all should have held because the stock has gone higher since they sold. The analyst's downgrade is noted in the article in the section on sentiment. It was a valuation downgrade based upon the recent strength in the stock's price. OII stock does have good momentum. Traders might want to wait for a cheaper price, but I don't like to play that game. I view it as a stock for the long-term. Thanks for your comment
The Misplaced Mania Over Dividend-Paying Stocks [View article]
The Misplaced Mania Over Dividend-Paying Stocks [View article]
The Misplaced Mania Over Dividend-Paying Stocks [View article]
The Misplaced Mania Over Dividend-Paying Stocks [View article]
The Misplaced Mania Over Dividend-Paying Stocks [View article]
I agree with jacob212 who, in an earlier comment, raised the question of what would happen to the stock price of Apple if they declared a very large special dividend. Nobody responded to the question he raised. And he was being conservative. By now, Apple probably has over $80 per share in cash. Wouldn't the stock trade lower on the ex-dividend date if they declared an $80 special dividend? And wouldn't the stock be less attractive with their cash horde gone?
That being said, several of the commenters have noticed that I disclosed my holding of Microsoft. Early in my article, I wrote that Microsoft's paying a dividend and increasing it over time is beneficial to investors because the company is not using its increasing cash fortune. The same might actually be true for Apple ! Their excess cash is building up much faster that they are spending it, even as they are expanding rapidly. Unless they plan to make a large, wise acquisition, initiation of a dividend would probably benefit shareholders, as would a share buyback.
Many dividend-paying companies carry debt on their balance sheet. Had they paid lower dividends, they would need to borrow less and would have lower interest payments to make, and net profits would be higher. Wouldn't the higher net profits enable the shares to command a higher stock price?
I do recognize that receiving regular dividends can be a great convenience for investors who desire cash income from their portfolio. I just view the dividend as being part of the overall total return and not a "free lunch" extra. Therefore, although my portfolio contains several dividend payers, including several mentioned by the commenters above, I do not choose to select stocks based on their dividend payout policies. And that was the main point I was trying to get across in my article. Many thanks to all for your comments.
Money Growth, Inflation And the Economy [View article]
Harris & Harris to Benefit From Solazyme IPO [View article]
3 Small Stocks Worth a Look [View article]
Disclosure: I am a shareholder.
Research Frontiers: Questionable Prospects Not Holding Back Stock [View article]
Research Frontiers: Questionable Prospects Not Holding Back Stock [View article]
Research Frontiers: Questionable Prospects Not Holding Back Stock [View article]
In recent months, various automotive blogs have confirmed that Magic Sky Control will be an option on the 2012 Mercedes SLK, which is expected to be introduced in June, 2011.
The recent 10-Q shows REFR's nine month loss to have been $3.1 million on $425,942 fee income from licenses. The SLK will provide the first major marketing success for REFR if consumers prove willing to pay for the ability to adjust the sunlight (and heat) coming into their cars. If so, huge profits likely will follow as Suspended Particle Device technology is adopted for sunroofs in other car models and higher sales volumes drive costs down. Acceptance in the automotive market will spur sales in the markets for aircraft and architectural glass, which have been proceeding at a slow pace up to now. At this time, REFR stock is suitable for aggressive speculators, only.
Disclosure: Long REFR stock
Time to Start Rooting for a Greek Default [View article]
Return to Normal: 15 Month Bond Interest Rate Forecast [View article]
Return to Normal: 15 Month Bond Interest Rate Forecast [View article]
Arnold Landy's Highest Conviction Pick: A Focused, Deepwater Drilling Leader [View article]