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URL:  http://boards.fool.com/a-stocks-dividend-is-a-key-factor-in-my-choice-26380742.aspx

Subject:  Re: FKA: GSK Date:  2/13/2008  2:45 PM
Author:  mungofitch Number:  7397 of 16119

A stock's dividend is a key factor in my choice. If the dividend is above what I could earn from a CD, I am not bothered by stock price movements, as long as the company's business remains stable enough to maintain the dividend.

A good rule of thumb is to buy stocks which are priced at levels
below their intrinsic value (IV). Sure, IV is hard to estimate, being
based on an imperfectly known present and a wildly uncertain future.
But, it's the only method which guarantees good long term results,
so doing it badly is much better than not doing it.

So, your comment is a succinct statement of a very dangerous fallacy.
It's a shame that it is so widely held. In short, only the present and
future earnings and assets matter in determining the value of a firm.
Why so? Dividends aren't income, they are solely a method of
shifting real income payments from one period to another. Raising the
dividend increases the short term at the expense of the long
term---the terminal value of the investment from its assets.
This time shift does not affect the intrinsic value one way or another,
so, at any given level of trend income, a change in the dividend yield
does not change the intrinsic value of the investment.
Real income comes from the underlying business, and its sustainability
and size are