I don't get the Dividend Game :-)

[earth_imperator]

@mervyn in an other thread writes that a Chinese company (Shanghai Petro) pays 9% dividend annually:
https://www.elitetrader.com/et/threads/china-decoupling-from-wall-street.369075/page-2#post-5655648

 

[newwurldmn]

That's exactly what the person you quoted said, you doofus. And as you can see there are many corporations' CEOs who do decide to pay out dividends. Even CEOs who operate similar conglomerates like Berkshire.

paying dividends isn’t stupid.

it’s better to pay dividends if you don’t have a better alternative for it, doofus.

 

[M.W.]

That is what I said, you just rehash my previous comment. I said that dividends are paid when the company does not have better re-investment opportunities. The dividend payment of many corporates are in effect part of a "dividend payment game" because investors almost expect to get paid a dividend, even though it actually signals that the company has no clue how to generate higher returns for its shareholders. But most investors would interpret it as a negative if a corporate cut their dividends, even if they announced on the same investor call that they decided to instead divert the cash flows to higher yielding capital investments.

paying dividends isn’t stupid.

it’s better to pay dividends if you don’t have a better alternative for it, doofus.

 

[Cabin111]

There is a place in society for dividends...Elderly people who want/need income while they preserve assets. An example why managers of trust funds choose ADM...

Cash Dividend Declared

In addition, ADM’s Board of Directors declared a cash dividend of 40.0 cents per share on the company’s common stock. The dividend is payable on Sept. 7, 2022, to shareholders of record on Aug. 17, 2022. This is ADM’s 363rd consecutive quarterly payment, a record of more than 90 years of uninterrupted dividends. As of June 30, 2022, there were 560,558,773 shares of ADM common stock outstanding.

What would you do if you were handling your disabled niece's or nephew's estate/trust?? Many traders just don't see the other part of society...

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwib6Nb35sT5AhVnLEQIHUyTCMEQFnoECBEQAQ&url=https://www.ncleg.gov/EnactedLegislation/Statutes/PDF/ByArticle/Chapter_35A/Article_9.pdf&usg=AOvVaw1P0NmeuIkkJ5qOak526XOk

I just grabbed the above off the internet as an example...

 

[newwurldmn]

You didn’t say that. You said “there are many ceos who pay dividends.”

I’m not sure what your point is. Perhaps you are on your period.

companies in the US never cut their div because they have better uses for the cash. They almost always cut their divs because their profits are declining. Div payouts are typically small and a company would rather use debt to finance the new project. This is different in Europe.

but I’m not sure what your point is in this thread. I responded to a comment specific to Warren Buffett who is very unique to other conglomerates. He really has no peers.

That is what I said, you just rehash my previous comment. I said that dividends are paid when the company does not have better re-investment opportunities. The dividend payment of many corporates are in effect part of a "dividend payment game" because investors almost expect to get paid a dividend, even though it actually signals that the company has no clue how to generate higher returns for its shareholders. But most investors would interpret it as a negative if a corporate cut their dividends, even if they announced on the same investor call that they decided to instead divert the cash flows to higher yielding capital investments.

 

[deaddog]

 

[vanzandt]

That's exactly what the person you quoted said, you doofus. And as you can see there are many corporations' CEOs who do decide to pay out dividends. Even CEOs who operate similar conglomerates like Berkshire.

All due respect... @newwurldmn is no "doofus". And I realize you're relatively new here.... so no biggie... but fwiw... the man probably has more net worth tied up in junk in his garden shed.... than 80% of the regular posters here have in total.
And we don't even want to get into the value of that 10'X10' chunk of dirt that the garden shed sits on. He could probably sell it, and buy a ranch in TN.
All from trading.
Just sayin'...

 

[M.W.]

Lol, yeah, emphasis on 'junk'. His point is highly convoluted, regardless of how long I or he has been on this site.

He suggests all corporate CEOs are smart cookies yet what he states about their corporate decision making is not smart at all. It's outright stupid and only confirms many corporates are involved in the dividend payment game that actually disadvantages shareholders. Its all virtue signaling. Look at Apple. They use most of the money to either re-invest or for share buy backs. Yes even they issue dividends but the share buy backs are a lot more significant. If they were sitting on a relatively large debt pile they would pay it down not distribute profits through dividends. Apple paid 85 billion in 2021 for share buy backs and 14 for dividends.

There are smart and there are sheeple CEOs. But for @newwurldmn there only exist smart guys in the Treasury departments of corporations. A smart decision maker is concerned with the relative difference of the dividend yield, interest payments on serviceable debt, and expected returns from re-investments into new and existing projects.

All due respect... @newwurldmn is no "doofus". And I realize you're relatively new here.... so no biggie... but fwiw... the man probably has more net worth tied up in junk in his garden shed.... than 80% of the regular posters here have in total.
And we don't even want to get into the value of that 10'X10' chunk of dirt that the garden shed sits on. He could probably sell it, and buy a ranch in TN.
All from trading.
Just sayin'...

 

[newwurldmn]

I never said that all dividend policies are good. Clearly you think all dividend policies are bad. Someone who has been on the institutional side of finance surely understands the complexity in managing shareholders and capital structure would have a more nuanced view than what you’ve stated.

There is substantial evidence that historically dividend paying companies outperform non dividend paying stock as the earnings volatility is lower, management is more constrained, and (I believe) the market underprices the longevity of dividends (mentioned in this thread already).

Apple pays a nominal dividend because the shareholders demanded it. Are those long term institutional shareholders virtue signaling?

While stock buybacks are tax advantaged for long term shareholders who would reinvest the dividend back into the stock, they aren’t for shareholders who want to use the earnings for other things. The second set of shareholders has only one option to monetize the earnings of the company: sell the stock. Clearly appeasing these investors is virtue signalling by sheeple CEO’s.

Surely someone with your experience can understand how different investors can have different investment goals and be rational at the same time. You can surely also understand how a company will have different uses for their excess cashflow as well.

You can’t be the simpleton that you are making yourself out to be in this thread?

Btw - my original post was specific to Warren Buffett. Berkshire may not pay dividends to shareholders but Berkshire demands dividends from all its portfolio companies. Buffett must only be hiring sheeple for his CEO’s.

Lol, yeah, emphasis on 'junk'. His point is highly convoluted, regardless of how long I or he has been on this site.

He suggests all corporate CEOs are smart cookies yet what he states about their corporate decision making is not smart at all. It's outright stupid and only confirms many corporates are involved in the dividend payment game that actually disadvantages shareholders. Its all virtue signaling. Look at Apple. They use most of the money to either re-invest or for share buy backs. Yes even they issue dividends but the share buy backs are a lot more significant. If they were sitting on a relatively large debt pile they would pay it down not distribute profits through dividends. Apple paid 85 billion in 2021 for share buy backs and 14 for dividends.

There are smart and there are sheeple CEOs. But for @newwurldmn there only exist smart guys in the Treasury departments of corporations. A smart decision maker is concerned with the relative difference of the dividend yield, interest payments on serviceable debt, and expected returns from re-investments into new and existing projects.

 

[zghorner]

That's exactly what the person you quoted said, you doofus.

tut tut monsieur..."name calling" as you said in this very thread is bad form. Lets lead by example and practice what we preach.