Ganesh Kumar

Investing in Dividend Paying Companies

Interesting analysis. I would also like to know how you would have faired if you reinvested the dividends. Also if the analysis can distinguish between companies that raise the dividends consistently and the ones that do not.

Dividend Aristocrats: Top Dividend Growers

I am a big believer in Dividend investing. Currently we have Mergents Dividend AChievers and we have S& P Dividend Aristocrats. It would be great if some one wrote a detailed piece comparing them.

I have seen studies done historically which proves dividend paying companies far outperform non-dividend paying companies.

The problem is investors do not have patience and do not look it from a 10 to 20 years perspective. They always seeing a stock price growth for 5 years and decide the stock is dead beat. For example look at WMT chart for 5 years and then again for 15 years. You will see the difference.

My logical explanation as to why I like dividend paying companies is, it provides discipline to the management. IF a company is 'committed' to pay dividends and to grow them as the companies listed above, it provides them with a good guide line and they do not go on a shopping spree and waste money on big costly acquisitions. It provides a dependable inflation adjusted income stream for the patient investor.
I am still torn between share repurchases and dividends. I normally reinvest dividends through a DRIP program so I wonder whether stock repurchase is better for me tax wise. However a dividend is a public commitment to either retain or increase the distribution (I love companies that are committed to increase dividends like WMT, JNJ) but stock buy back is not a commitment. A company may choose NOT to buy back shares when the prices get too high.

I have some questions on NUCOR though. As I understand they are a commodity company without any 'brand' or moat. How do they manage to perform so well over time?

In the past I have resisted temptations to own NUCOR as it is a commodity company. Can some one provide more info as to why NUCOR will be around for next 30 years?