61–70 of 308 posts
Earlier quoted context omitted.
If a company can still afford to pay out dividends it probably isn't really in need of aid.
Paying a dividend is paying a person. It's like you're saying that 'as long as they can afford to keep paying employees' they don't need aid. Would you rather they stopped paying people but didn't take aid? The whole point of the aid is so they can keep going and keep paying people.
Earlier quoted context omitted.
>If you didn’t keep enough cash on hand [...] This is implying you could keep enough cash on hand. Outside of tech giants, how many companies keep enough cash reserves to survive months without revenue?
There is a wide expanse between running your business razor thin as a profit extraction machine and keeping 12 months of cash reserves. This policy simply looks upon the former as a poor choice.
Earlier quoted context omitted.
Dividend and share buybacks are the same end result, just different mechanisms for enriching shareholders. If you didn’t keep enough cash on hand (because you were shoveling profits out the door), you lose your ownership interest (insolvency with no bailout). These are very reasonable conditions for a nation state bailout.
No, I don’t think the two are the same. Like I said, dividends are usually the “salary” an employer takes at the end of the year. It could be $1, it could be $100,000, but it all depends upon how the business did. This is exactly how everyone is constantly complaining that a business should be operating - pay all the employees, then the owner/CEO/etc. takes part of what is left over.
When a company requires more cash, in times of need, it can issue debt or raise capital. Capital is usually paid last, in the pecking order. If government is lending to companies, it is reasonable to require them to avoid depleting its cash reserves paying capital.
Earlier quoted context omitted.
There is a wide expanse between running your business razor thin as a profit extraction machine and keeping 12 months of cash reserves. This policy simply looks upon the former as a poor choice.
Almost no one keeps 12 months of cash reserves. Apple, with is famous cash hoard, is around that mark.... I can't think of other large companies offhand that are.
Edit: Very few business have that cash on hand, but will usually have access to credit revolvers that could carry them through this. I am aware of many firms that have drawn down their entire revolver.
Earlier quoted context omitted.
No, I don’t think the two are the same. Like I said, dividends are usually the “salary” an employer takes at the end of the year. It could be $1, it could be $100,000, but it all depends upon how the business did. This is exactly how everyone is constantly complaining that a business should be operating - pay all the employees, then the owner/CEO/etc. takes part of what is left over.
Depends on scale. American Airlines in the US used 80 percent of their profits for several years for share buybacks ($12.5 billion from 2010-2019). Not R&D, not salary increases for workers. Does that deserve a bailout that preserves existing ownership? That’s the target. That sort of behavior should be nuked from orbit. I’d agree it’d be different if your business is small (less than $10M/year in turnover); you’d lo…
Earlier quoted context omitted.
Dividend and share buybacks are the same end result, just different mechanisms for enriching shareholders. If you didn’t keep enough cash on hand (because you were shoveling profits out the door), you lose your ownership interest (insolvency with no bailout). These are very reasonable conditions for a nation state bailout.
>> mechanisms for enriching shareholders It's important to point out that "shareholders" could include "managed retirement plans", especially when talking about stocks that pay dividends.
> The government also said that companies which pay out dividends, buy back own shares or are registered in tax havens won’t be eligible for any of the aid programs... Well first off, dividends are a normal method for business owners to make an income... they take all the risk, but reap some limited rewards by taking dividends rather than a salary. Buying back shares I’m fine with. While that could actually be seen a…
Except if they did actually take all the risk, they would presumably be going bust right now...but they aren't going bust because they are being bailed out.
This is an example of "privatizing the gains and socializing the losses", the opposite of ownership risk.
Besides dividends are not the only reward of ownership, the equity/stock has a value separate from the dividend...a company taking taxpayer dollars and turning around and give x% of taxpayer bailout to owners is a direct transfer of wealth to the ownership class and just burns the cash flow the business presumably needs to attempt to survive.