Menachem Ben Yakov

Dividends Show Differences Between Financials

To Lesers' on the money comment I would add the following factual information-

Since 1927, dividends have
contributed over 44% of the total
return of the S&P 500 Index,
with pure capital appreciation
accounting for less than one
third of total return and if those same dividend
payments had been reinvested, dividends would
account for over two
thirds of total return over the
same time frame.


On Aug 31 04:11 PM Leser wrote:

> I agree with jimsep and Menachem Ben Yakov.
> When purchasing a stock, look for the reasonable payout of -- what
> 25% or 50%, ballpark figure -- profits to the stockholder in the
> form of dividends (not so much buybacks, which I suspect may be to
> makeup for all the stock thrown at the executives of the company
> to cover their raiding the profit cookie jar.)
> It's old fashioned fiscal responsibility at running the business
> the company says it's in. Buying other companies should be judiciously
> done, not in a greedy way to spend the shareholders' money, as if
> the shareholder doesn't know what to do with it. He or she should
> use the dividends to buy more of the same stock. If the company is
> that good, the shareholder probably would.
> Of course, companies with high dividends and high debt--well the
> debt washes out the benefit of the current dividend, I would say.
>
> Yes, if we went back to the traditional high dividends--even after
> a 15 (or 20% taxation in the future?), it would be one way to know
> the executives of the company are really working for us. What a
> novel thought.
> Dividends, dividends, dividends. The proof is in the pudding.<br/>
>

Dividends Show Differences Between Financials

Both HSBC and Lloyds TSB have committed to a progressive dividend policy and have adequate capital to maintain that policy. I applaud the write as the fundamental truth regarding any stock, that its worth increases regardless of market conditions if its dividend increases, is often ignored.
Great article and should be read by every investor.