71–80 of 114 posts
It's a well executed website, but there is no good reason for it to exist. You shouldn't be on a quest to find high yield dividend stocks in the first place. Whether a stock pays dividends really shouldn't factor in to your decision as to whether to buy it. Any dividend a company pays out makes the company worth that much less. Whatever you stand to gain from the dividend, you stand to lose in the value of the stock…
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Wrong. You claim that AAPL goes from $100 to $99 when it distributes $1. The only way that mean anything is if you also claim that the next year, AAPL hands out $1 and drops to $98. Clearly that is not how the stock price has developed over the years. Dividend paying stocks don't decline in price. They increase in price, just like any other stock. And some decline, like any other.
No, you're wrong. OP said that on the instant that $1 dividend is paid, the stock price goes from $100 to $99. The extrapolation that next year the stock price will go from $99 to $98 is _your_ extrapolation, and wrong. The moment after the the dividend is paid the stock's price might go up, might go down. So on next dividend's payment it might go from 50 to 49 or from 200 to 199. The conclusion that this implies tha…
It's a well executed website, but there is no good reason for it to exist. You shouldn't be on a quest to find high yield dividend stocks in the first place. Whether a stock pays dividends really shouldn't factor in to your decision as to whether to buy it. Any dividend a company pays out makes the company worth that much less. Whatever you stand to gain from the dividend, you stand to lose in the value of the stock…
There may be other reasons not to invest in such a stock, but I seem to keep seeing value investors trying to compare apples to oranges.
It's a well executed website, but there is no good reason for it to exist. You shouldn't be on a quest to find high yield dividend stocks in the first place. Whether a stock pays dividends really shouldn't factor in to your decision as to whether to buy it. Any dividend a company pays out makes the company worth that much less. Whatever you stand to gain from the dividend, you stand to lose in the value of the stock…
Why does dividend exist then?
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Why does dividend exist then?
Because companies want to return profits to shareholders. Share buybacks are more common now but achieve the same thing. If the company is still growing it should be reinvesting in the business rather than throwing off cash but some stable (or declining) businesses have no good way to do so. That’s why dividends can be a red flag.
But the profits are already accounted for through the stock value.
Dividends are useless, because the stock falls in value relative to the dividend when it is paid.
Dividends allow you to obtain money from the business without giving up control. Small distinction, and only really relevant to those with large holdings.
Nonsense. The business can choose to issue new shares whenever it pleases. https://en.wikipedia.org/wiki/Follow-on_offering
Earlier quoted context omitted.
Because companies want to return profits to shareholders. Share buybacks are more common now but achieve the same thing. If the company is still growing it should be reinvesting in the business rather than throwing off cash but some stable (or declining) businesses have no good way to do so. That’s why dividends can be a red flag.
> Because companies want to return profits to shareholders. But the profits are already accounted for through the stock value.
This is, in part, a product of the actual pattern of returns combined with the expectation of change: even if you are profitable, if the market thinks you won’t return any profits until the corporation eventually succumbs to gambler's ruin and dissolves with no residual value, your stock price will be in the toilet.
What is laid out here is called "yield chasing". Companies with extraorbitant dividend yield often end up losing much more on a 5Y timescale. There are very, very few companies that pay more than 3% and not end up losing money on the long run. (And even that is very bleak compared to just a vanilla S&P 500 yield). If there was a "magic bullet" high yield stock, everyone would flock and buy that one.
Perhaps you would prefer so-called "Dividend Aristocrats" that have a long track-record of high dividends.
For example, Caterpillar is of them, but its yield is under 3%.
Dividends generally are not super useful to investors - you don't get to decide when they occur and when you pay tax. If you are in the accumulation phase of life this isn't really useful if you are going to be reinvesting the money anyways. They aren't bad, just not really worth the hype. As always, bogleheads has a good writeup on dividends: https://www.bogleheads.org/wiki/Dividend
Indeed, hence why buybacks are so popular. However keep in mind that there are qualified dividends as well which are taxed at the preferential long term capital gains rate. Still a tax though but rolling those back into the stock has good long term results. I think congress was talking about taxing buybacks?