I don't get the Dividend Game :-)

E

earth_imperator

Let's say a company pays out 5% dividend p.a. and I own the stock and get that dividend paid out into my trading account. But: when such a dividend payment is made, then the stock price obviously has to fall that same amount in percent, ie. 5%, since it has to be paid from the market capitalization of the company. Ie. my stock loses the same amount I earn as dividend, ie. a ZeroSum Game.
So then where is any benefit or advantage, or even logic, if any, in this IMO stoopid "Dividend Game"? :)
 
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M.W. said:
Legitimate question. How about you help him out rather than name calling. So, @zghorner, what zo you think a good explanation would be?
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They are an income generating asset that is tax advantaged...

I think the fallacy is employing a short term poor/middle class mindset to something which is better for a longer term mindset that really suits the wealthy class.
 
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earth_imperator said:
Let's say a company pays out 5% dividend p.a. and I own the stock and get that dividend paid out into my trading account. But: when such a dividend payment is made, then the stock price obviously has to fall that same amount in percent, ie. 5%, since it has to be paid from the market capitalization of the company. Ie. my stock loses the same amount I earn as dividend........
So then where is any benefit or advantage, or even logic, if any, in this IMO stoopid "Dividend Game"? :)
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%%
SeVeral advantages\
1] Enron could not + did not pay out dividends. Not really a zero sum game with stocks; more like rent on RE. [2]Payment without selling/SEC fee/bid- ask spread.....................Good question.
 
Everyone on social media gets so excited for the Dividend game. But that's meaningless if the stock drops or goes nowhere.
That's like saying you can stab me, if you do it in front of the hospital.
You're back to break even. Even money, got nowhere.

That dividend money has to come from somewhere. It comes from the company's bottom line...which eats into its net profits, which makes it slightly less appealing.
 
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earth_imperator said:
So then where is any benefit or advantage, or even logic, if any, in this IMO stoopid "Dividend Game"? :)
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The cash moves from the company's accounts into the shareholder's account for the shareholder to use as they see fit.

The other option is for the company to retain profits so it's share price increases and then the shareholder could sell some shares to raise the same cash. But then the shareholder has a reduced shareholding in the company.
 
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earth_imperator said:
... But: when such a dividend payment is made, then the stock price obviously has to fall that same amount in percent, ie. 5%, since it has to be paid from the market capitalization of the company. Ie. my stock loses the same amount I earn as dividend, ie. a ZeroSum Game ... :)
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I will let you figure out the answer to your own question but posing another question -- If the market cap drops after each dividend payout, why doesn't the stock price of all dividend paying stocks eventually go to zero?
 
The fall in price is temporary to just adjust for the dividend. If the company's solid, the price will recover. When you buy a company's stock, you become its owner. The dividend is just a way for the owners to get some money from the company that they invested in which is perfectly legit as it's their money and it's their company. When you work for others, you get paid a salary, but the owners of companies work for themselves and they need to get paid as well. The dividend is the owners' salary. It's not a game. It's a normal business operation where people get paid so they can turn around to pay their bills.

OP is just a clueless idiot that's creating frivolous threads just to get attention. I bet you he's going to create a thread that says "Why do we shit?" next.
 
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