I love Dividend Distributions

[mathjak107]

what is interesting is that 387 stocks of the 502 in the s&p 500 pay dividends .

many appear to be growing dividends but in fact dividends are shrinking.

dividends paid by companies in the s&p 500 are less than 2% of their share price.

the long term average was actually 4.4% according to data from shiller.

dividends have been falling steadily as a share of earnings with about 1/3rd of profits being paid out compared with nearly 50% in the 1980's and 1990's.


if the s&p companies paid out the same percentage of profits as they did during the decade ending last december share holders would have gotten 1 trillion more in dividends than they did.

instead these dividend payers have actually been scaling back paying out no where near what they were as a percentage of earnings even though to the public it appears they are raising dividends . in reality they raise dividends only a fraction of what they should be based on earnings.

most of that money was spent in stock buy backs which companies realized are a far better thing to do with excess cash than give it away.

the s&p 500 companies bought trillions of dollars worth of stock buy backs the last decade . last year they spent 540 billion on buy backs alone. that surpassed the prior record which was 504 billion in 2007.


ironic that alot of growth the s&p 500 has seen was not because they paid a dividend but actually because they didn't and retained the earnings for better use.

[clifp]

Quote:

Originally Posted by mathjak107 most of that money was spent in stock buy backs which companies realized are a far better thing to do with excess cash than give it away. the s&p 500 companies bought trillions of dollars worth of stock buy backs the last decade . last year they spent 540 billion on buy backs alone. that surpassed the prior record which was 504 billion in 2007. ironic that alot of growth the s&p 500 has seen was not because they paid a dividend but actually because they didn't and retained the earnings for better use.

I think there is very little evidence that stock buy back are better for shareholders than dividends. There is a lot of evidence that stock buybacks are better for the guys in the C suite, since it makes their stock options a lot more valuable than merely increasing dividends.

[redduck]

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Originally Posted by mathjak107 a penny doubled and compounded every day for only 31 days is over 10 million bucks . such is the power of compounding.

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Originally Posted by haha This thread deserves nomination in the Strangest of the Strange Competition. In fact, I nominate it. Ha

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Originally Posted by pb4uski I second the nomination. (And I agree with Ha? How in the world did that happen?)

Yeah all that's fine: nominate it and second it all you want. But, I still don't know where I can get my penny doubled and compounded everyday for thirty-one days and walk away with ten million bucks. I just hope the pay-off isn't in pennies. It would make it real hard to walk away carrying my hard-earned money.

[bad_LNIP]

I think there is very little evidence that stock buy back are better for shareholders than dividends.

Correct.

There is a lot of evidence that stock buybacks are better for the guys in the C suite, since it makes their stock options a lot more valuable than merely increasing dividends.

Also correct. IBM is the classic example of this where they used some 100B in buybacks to juice their EPS figure, which was well received by wall st and analysts. Oh, btw revenue DECLINED over the past few years, yet EPS increased.

[redduck]

I was just thinking about this penny compounding thing. Why doesn't everybody do it? Then, people could figure out exactly when they wanted to retire, get a penny, start the doubling and compounding process and retire 32 days later. This would eradicate the OMY disease. Biggest thing since the polio vaccine. (OK, maybe Seventh Day Adventists wouldn't go for it).

[pb4uski]

redduck,

I can see this penny thing is really bothering you so I tell you what.... I'll take on the first 10 days if you can find someone to cover off days 11 to 31.

pb4uski

[redduck]

pb4uski,

You are a visionary.

That said...
We might want to keep this a secret just between us because some people here will probably be jealous and claim we were just lucky. Not to put pressure on you, but, if this works, I'll be able to completely retire before I'm 71.

I remain...
redduck

ps: Since you're taking the first 10 ten days, you'll have to come up with that first penny or the deal is off.

pps. Do we have to give anything to that mathjak guy for his idea?

[mathjak107]

Quote:

Originally Posted by clifp I think there is very little evidence that stock buy back are better for shareholders than dividends. There is a lot of evidence that stock buybacks are better for the guys in the C suite, since it makes their stock options a lot more valuable than merely increasing dividends.

well buffet seems to think so and that facts speak for themselves i think.

dividends are actually reduced compared to what they should be and stock buy backs are way up.

so companies basically are saying we can't do better than invest in ourselves . whether true or not this has been the trend the last decade. and this is how things are being done now.

while investors are happy with those dividend raises the reality is they have actually been seeing dividend cuts on a percentage basis and that money deployed elsewhere. the 1 trillion dollars not payed out is reflecting that fact.

[eta2020]

Quote:

Originally Posted by redduck pb4uski, You are a visionary. That said... We might want to keep this a secret just between us because some people here will probably be jealous and claim we were just lucky. Not to put pressure on you, but, if this works, I'll be able to completely retire before I'm 71. I remain... redduck ps: Since you're taking the first 10 ten days, you'll have to come up with that first penny or the deal is off. pps. Do we have to give anything to that mathjak guy for his idea?

If you can not find that penny than Mr. Second Nominator will advise you how to take a mortgage on 80% of your house. (He is very proud of his mortgage )

That should give you plenty of pennies to work with.

[pb4uski]

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Originally Posted by redduck ....ps: Since you're taking the first 10 ten days, you'll have to come up with that first penny or the deal is off. pps. Do we have to give anything to that mathjak guy for his idea?

The first penny is principal, not compounding, so I'm afraid you are on your own for that. If you don't have the cash, you can always take out a mortgage.

On the second one, since it is simply math, and well-known, I don't think we owe mathjak a penny.

Let me know when you find the suckers financiers for days 11 to 31.

[Zathras]

Quote:

Originally Posted by mathjak107 ... while investors are happy with those dividend raises the reality is they have actually been seeing dividend cuts on a percentage basis and that money deployed elsewhere. the 1 trillion dollars not payed out is reflecting that fact.

You can't take the total amount of dividends paid and apply the results to individuals.
That is like saying the global average temperature is climbing therefore the temperature on any day in any selected location is also going up.

This individual investors dividend income stream is increasing. The reality is that there are many companies out there that do continue to grow their dividends faster than inflation.

[redduck]

pb4: I'm all over it. Thanks again.

eta2020: Very impressive about predicting pb4uski's mortgage strategy. Makes me think you had some inside information (which is also very impressive).

I think I'll take out a mortgage and put myself on the retirement list before the year is out.

[eta2020]

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Originally Posted by redduck pb4: I'm all over it. Thanks again. eta2020: Very impressive about predicting pb4uski's mortgage strategy. Makes me think you had some inside information (which is also very impressive). I think I'll take out a mortgage and put myself on the retirement list before the year is out.

Yea I saw his postings on another thread about 80% cash out mortgage on his house. Excellent strategy indeed... beats dividend growth and not having any mortgage.

I will also take to heart his advice on not holding shift key down and buying a new keyboard.