Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 03-01-2009, 03:53 AM   #61
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,414
its not that dividends are a ponzi scheme... its just there is no difference in the mechanics of it whether your non dividend paying stocks rose 4% and you sold off 4% on your own or whether they sell 4% of the value of the company on your behalf and give it to you... its no different then a mutual fund distribution.

the mechanics of paying that dividend are not a bonus, an extra kicker or anything else thats giving you anything extra they are merely symbolic ..


its all about total return ,,,,PERIOD no matter how you get it
__________________

__________________
mathjak107 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

If dividends are obsolete - so is "investing".
Old 03-01-2009, 08:30 AM   #62
Recycles dryer sheets
 
Join Date: Jun 2008
Posts: 184
If dividends are obsolete - so is "investing".

I thought the whole theory of owning stock was basically: "I have a great idea for a profitable business. I don't have the money to create it but if everyone will put money into the business I will split the profits pro rata."

So why should I invest in your company again?

Because the shares will increase in value?

Only until we run out of bigger fools.

We are getting close!
__________________

__________________
Hal3 is offline   Reply With Quote
Dividends - or not.
Old 03-01-2009, 08:38 AM   #63
Recycles dryer sheets
 
Join Date: Jun 2008
Posts: 184
Dividends - or not.

Quote:
Originally Posted by mathjak107 View Post
its just there is no difference in the mechanics of it whether your non dividend paying stocks rose 4% and you sold off 4% on your own or whether they sell 4% of the value of the company on your behalf and give it to you.
I disagree.

Dividends paid from operating profits are a distribution of real income.

If a stock goes up 4% because Cramer says it is great and you sell 4% that is not a distribution of real income.

In the short run it doesn't matter which is which - that is true - but in the long run it really does. Price changes in a stock due to supply and demand for the paper stock certificates (don't get me started on that) are not the same as price changes due to the supply and demand for the companies products and the underlying profit.
__________________
Hal3 is offline   Reply With Quote
Old 03-01-2009, 10:09 AM   #64
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,414
hal re-read what i posted,.... thats what i said,.... the dot coms went up in price on pure specualation.. alot had no earnings or even a product....


thats has nothing to do with the mechanics of the dividend for the payout, forget about the financial shape of the companies assume they are both good . the mechanics stays the same whether the company sells 4% off and gives to to you or you sell 4% off yourself of a growing non dividend paying company.


forget about the merits of dividend paying stocks thats not what im referring to... dividend paying stocks tend to do better because of the symbolic gesture of the dividend .... it says im a healthy growing profitable company and i have cash to spare........

at least it used to say that.... all the mechanics refer to is that the actual paying of a dividend from a total return stand point is a non event... the dividend made you not 1 penny richer by itself; thats all im saying
__________________
mathjak107 is offline   Reply With Quote
Old 03-01-2009, 12:06 PM   #65
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,487
Quote:
Originally Posted by mathjak107 View Post
all the mechanics refer to is that the actual paying of a dividend from a total return stand point is a non event... the dividend made you not 1 penny richer by itself; thats all im saying
If your point is that the value of your investment is the same after that one transaction, technically you are correct. However, you can not conclude anything about investing from analyzing one transaction at one instance.

Over a period of time, however, there is a considerable difference between receiving a regular dividend payment or not.

Quote:
the mechanics of paying that dividend are not a bonus, an extra kicker or anything else thats giving you anything extra they are merely symbolic ..
There is nothing symbolic about receiving a dividend payment. Retained earnings are reinvested at management discretion and in line with management objectives while paid dividends are reinvested at investor discretion and in line with portfolio objectives. From this perspective a dividend is much more valuable to the investor. As a kind of forces rebalancing it also allows for a significant reduction in portfolio risk.
__________________
MichaelB is offline   Reply With Quote
Old 03-01-2009, 12:26 PM   #66
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,414
no less risk if you re-invest the dividends like most do
__________________
mathjak107 is offline   Reply With Quote
Old 03-01-2009, 12:29 PM   #67
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,414
Quote:
Originally Posted by MichaelB View Post
If your point is that the value of your investment is the same after that one transaction, technically you are correct. However, you can not conclude anything about investing from analyzing one transaction at one instance.

Over a period of time, however, there is a considerable difference between receiving a regular dividend payment or not.

There is nothing symbolic about receiving a dividend payment. Retained earnings are reinvested at management discretion and in line with management objectives while paid dividends are reinvested at investor discretion and in line with portfolio objectives. From this perspective a dividend is much more valuable to the investor. As a kind of forces rebalancing it also allows for a significant reduction in portfolio risk.

michael you can have a million transactions the fact is you cant dispute how a dividend works.. its a payment offeset by a drop in share price by the same amount... thats all it is.....

you want to debate the merits of a dividend paying stock over a non paying stock thats a different discussion then the above
__________________
mathjak107 is offline   Reply With Quote
Old 03-01-2009, 12:43 PM   #68
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by mathjak107 View Post
michael you can have a million transactions the fact is you cant dispute how a dividend works.. its a payment offeset by a drop in share price by the same amount... thats all it is.....
Mathjak, this argument of yours is a powerful example of the theory tail wagging the empirical dog. You really don't know what you are talking about, and reams of data prove it. Just becaseu the exchanges adjust limit orders, and adjust the day's gain or loss on an ex-div day says nothing even remotely as far reaching as your rather cranky thesis.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 03-01-2009, 12:48 PM   #69
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,613
Quote:
Originally Posted by mathjak107 View Post
michael you can have a million transactions the fact is you cant dispute how a dividend works.. its a payment offeset by a drop in share price by the same amount... thats all it is.....
That's precisely what it is with mutual funds that pay out dividends, but not strictly what a stock does. Yes, it has a tendency to open lower by fairly close to the amount of the dividend, plus or minus whatever amount the stock would have otherwise changed in value at the open. But it's not as formulaic as you describe.

Sometimes there are people waiting for a dividend to be paid out before buying in a taxable account so as to avoid "buying the dividend" and immediately getting some of their purchase price back as taxable income. These people could produce some added demand to buy.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 03-01-2009, 12:51 PM   #70
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,414
im not following your statement.... i think we got side tracked here and lost focus.... the comment was made that such and such a stock was paying a 5% dividend so even though it got pummelled it paid to wait it out.... my answer was the 5% dividend is a non event, just like a fund distribution you gained nothing in total return..... thats it , thats all i said... where the markets take it after that distribution god only knows but thats a seperate issue .. of course the question is now that most stocks are down down down and havent been recovering from those payouts how much less would they be down if they didnt pay a dividend all those years but then again maybe they wouldnt have attracted as many investors either so its impossible to really tell or maybe just had a higher share price and fell the same percentage anyway.... beats me.... all i know is im tired of seeing red every day...

after that comment about the dividend being a total return wash everyone is talking about the benefits of dividend paying stocks .... im not disputing that, theres tons of studies that show investors like the idea of seeing that a company has money to give them, even if the investor plows it right back in as a re-investment ...

i think this got dragged off course somewhere
__________________
mathjak107 is offline   Reply With Quote
Old 03-01-2009, 01:55 PM   #71
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,487
Quote:
Originally Posted by mathjak107 View Post
you want to debate the merits of a dividend paying stock over a non paying stock thats a different discussion then the above
Absolutely not. The stock prices is determined by open market bidding, period. Dividend payments may or not be reflected in stock prices.

I think you may have confused stocks with mutual funds.

Quote:
my answer was the 5% dividend is a non event, just like a fund distribution you gained nothing in total return..... thats it , thats all i said...
For a mutual fund there is no difference in value after the distribution. When a stock pays a distribution there is a great difference. You have the distribution cash in hand and the marketplace determines the price of the stock, which may or not reflect the distribution.
__________________
MichaelB is offline   Reply With Quote
Old 03-01-2009, 02:03 PM   #72
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,414
Quote:
Originally Posted by MichaelB View Post
Absolutely not. The stock prices is determined by open market bidding, period. Dividend payments may or not be reflected in stock prices.

I think you may have confused stocks with mutual funds.

For a mutual fund there is no difference in value after the distribution. When a stock pays a distribution there is a great difference. You have the distribution cash in hand and the marketplace determines the price of the stock, which may or not reflect the distribution.

read nyse rule 118 and then you will understand how it works,,,its no different .... where market bidding takes it after the reduction is up to the markets..

if the stock closes flat then your down the amount of the payout,,,simple concept.....
__________________
mathjak107 is offline   Reply With Quote
Old 03-01-2009, 02:07 PM   #73
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,613
I believe this sums up this thread at this point:

__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 03-01-2009, 02:11 PM   #74
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,414
ziggy i loooove that icon ha ha ha... wish we could find a bigger one
__________________
mathjak107 is offline   Reply With Quote
Old 03-01-2009, 02:27 PM   #75
Thinks s/he gets paid by the post
DblDoc's Avatar
 
Join Date: Aug 2007
Posts: 1,224
Can we go off topic for a moment and discuss which is better: buy and hold low cost index funds or active management?

FWIW mathjak I'm in your "camp". Total return is all that matters... I think Vanguard has several white papers that discuss it.

DD
__________________
DblDoc is offline   Reply With Quote
Old 03-01-2009, 02:33 PM   #76
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,414
easy answere, which ever gives you the higher return.....

i use both and some years my index funds do better some years my active.... its the kind of thing that you dont know which is better until after it happens....overall though over the last 20 years i went back as far as i could and my managed did outperform ... i follow fidelity insight newsletter for my active
__________________
mathjak107 is offline   Reply With Quote
Old 03-01-2009, 02:37 PM   #77
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,487
Quote:
Originally Posted by ziggy29 View Post
I believe this sums up this thread at this point:

Got that right.

mathjak, it's clear we are talking different things, so I'm gonna leave this thread, 'cause the only thing that's gonna change is that horse is gonna get tired of ziggy hittin 'it in the - well, you get the picture.

ziggy - how'd you do that?
__________________
MichaelB is offline   Reply With Quote
Old 03-01-2009, 07:08 PM   #78
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Brat's Avatar
 
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 5,914
Does anyone have an opionion about O & STON?
__________________
Duck bjorn.
Brat is offline   Reply With Quote
Old 03-01-2009, 10:12 PM   #79
Full time employment: Posting here.
CCdaCE's Avatar
 
Join Date: Apr 2006
Posts: 887
Quote:
Originally Posted by Brat View Post
Does anyone have an opionion about O & STON?
Unbelievable yields. Can it last?

[O] Realty Income Corp link

[STON] StoneMor Partners link

It's weird how STON's P/E ratio is 88 or something. Do they distrib. 99% of their earnings as dividends? I like the monthly payout on O.

-CC
__________________
"There's those thinkin' more or less, less is more, but if less is more, how you keepin' score?
It means for every point you make, your level drops. Kinda like you're startin' from the top..." "Society" - Eddie Vedder
CCdaCE is offline   Reply With Quote
Old 03-01-2009, 10:21 PM   #80
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Location: Los Angeles area
Posts: 1,432
Quote:
Originally Posted by Brat View Post
Does anyone have an opionion about O & STON?
O is a well-run, conservative REIT. They are less vulnerable than most retail REITs to recessions because of their triple-net structure. I do not invest in O because of their slow long term growth prospects - 4-5% over the years, IIRC.
__________________

__________________
learn, work, save, invest, fire
CyclingInvestor is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Our national heritage is fast disappearing calmloki Other topics 10 03-15-2008 11:09 PM
All in my head... Fireup2020 Health and Early Retirement 13 03-05-2008 09:05 PM
My little head game mickeyd Other topics 0 05-28-2006 05:45 PM
I'm in over my head Outtahere Hi, I am... 13 09-19-2005 07:13 AM

 

 
All times are GMT -6. The time now is 04:19 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.