MauDib

Cramer's Stop Trading - Peabody Is in Freefall (3/2/09)

What has to happen is that businesses increase dividends, not cut them, to encourage investment. Like buying a CD, that encourages families to save now because of increased consumption in the future, not just a hoped for promise of capital gains - that evaporate quickly.

Of all the stakeholders in a business, e.g. govt taxes, employees, etc., the distant owners get the least after everyone else gets their cut - the poster child is GM.

During this decade, I read financial commentators talking about a "mouth-watering" 3 % dividend - you have got to be kidding! Give the shareholders a real return on their investment since mgt does not need the cash for growth (and growth for its own sake - questionable benefit) - at least 7% OR 50% of net income, whichever is lower.

Example, Conoco has 6 bbls of oil for every share of stock, yet the share is priced below 1 bbl - why? The reason is that history has shown that the govt is the #1 recipient of the cash - 35% to 50% - then the employees then mgt -- with stock options, mgt has a disincentive to distribute dividends, rather try to grow the business. This is the opportunity to change this thinking. Investors would have a real incentive to invest.

Since this is not likely to happen, I will go back to individual rental properties which give me control and, thus, real ROI - spendable cash!