The Reason Why Stock Dividend Is Bad And Meaningless

[Saltynuts]

i think the market fundamentally undervalues dividend paying stocks. Someone who graduated in three years with a BS in finance would know of the dividend discount model. If the market were efficient, all the high paying dividend stocks would be much lower than they were several years ago.

I doubt dividend stock are undervalued, I highly suspect they are OVERVALUED given that so many people get the feels-goods with dividends, no recognizing that they could (after 1 year) just sale a portion of their non-dividend paying stock to get the same effect (but even better, as in a sale they get basis offset, but dividends do not).

Dividend discount model is familiar, but its utterly retarded if it does not take into account the value of the underlying investment, and the potential proceeds from a sale. It is the discounted total cash flow model that matters. It doesn't take a BS in finance to figure this out, of course...

 

[newwurldmn]

I doubt dividend stock are undervalued, I highly suspect they are OVERVALUED given that so many people get the feels-goods with dividends, no recognizing that they could (after 1 year) just sale a portion of their non-dividend paying stock to get the same effect (but even better, as in a sale they get basis offset, but dividends do not).

Dividend discount model is familiar, but its utterly retarded if it does not take into account the value of the underlying investment, and the potential proceeds from a sale. It is the discounted total cash flow model that matters. It doesn't take a BS in finance to figure this out, of course...

Your post made so little sense, I can’t even respond to it.

 

[piezoe]

Its not "above a certain amount" that get capital gains rates, its ALL dividends (from normal common stocks at least) that qualify for capital gains rates as long as you meet the holding period (which is like 61 days out of the 121 day period beginning 61 days before the ex-dividend date or something like that, but don't quote me on that as its been awhile, and I mean you destrina you trolling dweeb).

Dividends are not taxable in roth or regular IRA (or 401(k), among other things). I am talking about a taxable account there.

Its as simple as this:

Company A earns $10 and pays it out as a dividend. Company B earns $10 and reinvests it in operations. Assume that Company A and Company B can both earn 10% on their money, and you can too.

The $10 that Company A pays out to you will be taxed at a 23.8% rate, leaving $7.62 to compound over time (in your hands) at a 10% rate. In contrast, the $10 that Company B retains and reinvests will compound at a 10% rate over time. And that happens each and every years that Company A pays a dividend but Company B does not.

I can get more complex than that, but that is the gist of it.

Some friendly advice. Buy only Company B, and for god sake don't buy Company C that will use their retained earnings to pay executive bonuses. Company B, thank goodness, would never do that.