captainccs

Dividends: A Company's Leading Indicator

I believe it's a case by case issue, can the company invest the money better than you can? Typically new, growing companies can use cash wisely, for example, True Religion and Buffalo Wild Wings are using it to grow their retail chain. On the other hand, older, tired companies like Microsoft and Bank of America, instead of wasting cash on "diworsification" and empire building should return most of the earnings to shrehiolders via dividends.

Buffett is an interesting case: no dividends and no stock buy backs. Stock appreciation of BRKA from inception on Jan 12, 1990 is 13.3% vs. 5.4% for the S&P 500 and 7.6% for NASDAQ. Considering taxes, you would have had to earn more from dividends than Buffett's 13.3%. But then, had you bought BRKA in the second quarter of 1998 at close to $80 K, you would be in sad shape.

Buying at the right time is very important, the lower you buy the higher the dividend yield you get.

'Great' Companies That Are, Literally, Good to Go

A pointless comment.