Investing Catechism
- Thread starter nitro
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Your argument is essentially that stocks have no value unless they pay dividends. The logical conclusion of that argument is that a stock that is not paying all of its earnings in dividends is not worthy of investing. If you can't see that is the logical conclusion of your argument, then look at it again.
More complicated than that, but alas, no one reads what is posted. I am saying that what you describe above would essentially be true in the history of the stock market, but since the inception of the 401k, the market has become a ponzi scheme. This is the result of indiscriminate buying where at least once a month, pension funds etc come in to the markets, and buy everything in sight at any price. So investing has been turned into a momentum game, trying to manuever into a trading situation where you can time when these masssive funds come into the market. Turn that spigott off, and you would learn what I am talking about.
Every argument that has been made, with the exception of the synthetic dividend which is the only one that I am having trouble with, I have inconclusively answered in a logical manner. That you do not see what I am saying is a flaw in you thinking, not the logic of my arguments.
Please read your argument again. You are saying that a company with solid earnings that does not pay a dividend is just a ponzi scheme. Implying that it is not investable.
However, you say WAG is a great company because it has a record of paying solid dividends. However, it certainly would be possible for WAG to pay a higher dividend. So why invest in WAG when they could be paying more of a dividend? Why is their share price worth anything after the dividend is paid out? Afterall, the rest of the share price is just a ponzi scheme (according to you).
However, you say WAG is a great company because it has a record of paying solid dividends. However, it certainly would be possible for WAG to pay a higher dividend. So why invest in WAG when they could be paying more of a dividend? Why is their share price worth anything after the dividend is paid out? Afterall, the rest of the share price is just a ponzi scheme (according to you).
Yep. That is what I am saying.
Well, I would not invest in WAG here because its dividend yield is too low. Could WAG pay a higher dividend? You betcha, and that is why I have stated REPEATEDLY that WAG is not a good investment right now. I could be wrong, maybe WAG raises it's dividend 40%, and I miss out on getting in cheaply to get that yield.
But I am saying even more than this. I am saying all this BS about earnings, from companies that don't pay a dividend like AMZN, and investors (probably traders actually) that go chasing the stock BECAUSE OF THAT NEWS, is ludicrous! Now, if all of them are traders, that is another thing. But as an investor? LMAO.
AS AN INVESTOR, WTF do I care what a company earns if it doesn't pay a dividend, AND has shown a record that the dividend it pays is correlated to its earnings? I have said this countless number of times, but people don't get it.
You're not getting my point. Substitute a symbol in for WAG that you currently think is paying a "good" dividend. Ok, hopefully you have a symbol in mind...
Why aren't they paying a bigger dividend? Certainly that would be better according to your argument. Why invest in them? What's left of the company after the dividend is just a ponzi scheme (according to you). The "limit" of your argument is that stocks should be priced at $0 and should be paying out dividends continuously to keep it that way.
And even if you are right in theory (which I do not think you are), in practice the market clearly does not agree with what you are proposing.
Not necessarily. But I see what you are trying to say now. Your question or point is, how do companies determine their dividend, and how do I decide if that is gouging or generous? [I have already addressed the zero price with the REIT example.]
It doesn't matter, what matters is that YOU are thinking about it in these terms now. I have my own formula. You should have your own. But if the dividend is zero, then the answer is the stock is uninvestable, which means earnings are meaningless AS AN INVESTOR. Capice?
Now, the synthetic dividend has thrown a curve at my argument. I am still thiking about it, and I am pretty sure I have a counter argument.
Depends, you have to give me an earnings history, sector, dividend cover ratios, P/E, P/B etc etc. But the answer is almost certainly, no.
You are still missing a key point and are fixated only on one part of the triad of what I am saying. At this point, I can UNDERSTAND and would spend time watching it's earnings. THAT IS THE THING YOU KEEP MISSING. Why would any INVESTOR care that AMZN has this or that earnings, in the absence of a dividend, unless you are TRADING the stock! And the last part of that triad is, you may care as a trader because pension funds will invest in that stock, which means you have something to lean on, a ponzi scheme.