Chris B

Star Bulk Carriers: Interesting Dividend Payout

"Jeff Matthews has repeatedly pointed out the stock repurchase programs loved by Wall Street analysts often have severe negative long term impact on the companies with buy back programs. I think this is a graphic example."

Exactly. Beware when management is focused on keeping investors happy rather than growing a long term, stable, and sustained business. GM, Ford, and Chrysler (pre merger) kept their shareholders happy for decades with dividend payouts - until the day when their equity was worth nothing. GE was buying back shares at high prices up until a couple months ago, at least keeping ex-shareholders happy. Now they're borrowing from Buffet at usurious rates just to stay solvent. I bet they wish they had those dividends and buyback funds now.

When financing costs rise or possible losses can be foreseen, the dividend needs to be the first thing to go. Investors insisting otherwise need to explain why they favor severely damaging their company just to get a few % of payout. It's kind of like selling the doors, plumbing, and light fixtures out of your house to pay yourself a few bucks.