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URL:  http://boards.fool.com/seekingalfa-is-culpable-of-enabling-anyone-who-30407689.aspx

Subject:  Re: Dividends and the cliff Date:  11/30/2012  6:04 PM
Author:  kelbon Number:  7701 of 8855

SeekingAlfa is culpable of enabling anyone who wants to be an expert to pose as one. "Sure, think you're an expert, hop on over here and we'll dress you up as one and get some revenue from the ads. on our oh so professional and accredited looking web pages. (Snigger, snigger, all the way to the bank.) No, really it's getting to be that way.

I'm afraid the poor dear (expert) author of the article is a bit confused. He's a man with a hammer who thinks all dividends are nails.

Trouble is, some are. This is where his confusion lies. All dividends are not created equal. The author's condemnation of dividends would be better served as a warning to those who seek out-sized dividends thinking they are necessarily getting a good deal.

If you buy stock in a company that pays a very large dividend, all the while depleting its resources and running down the company, likely the stock price will go down and your net worth, if your have all your eggs in one basket, along with it.

However, if you buy a good company's stock that increases its earnings and book value over time raising dividend payments all the while, then your net worth will likely increase. Think Coca-Cola, for example.

The author is right in noting that when a company pays a special out-sized dividend, after it has been paid, the stock price often proportionally falls. This is why I'm generally not a fan of this practice, regardless of proverbial looming fiscal cliffs. "Thanks a lot buddy, I didn't want the dividend and now I have to pay taxes on it!" I'd rather see a higher stock price and choose when I want to cash in, if at all. Moving up a regularly scheduled dividend before the end of the year because of a possible tax increase on January 1 is a different story.

But, if you do buy the authors line, I can help: "The dividend itself is meaningless to your net worth, or even possibly detrimental if we take taxes into account, so just sign them over to me and you won't have to worry about anything; here's my mailing address…"

kelbon
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