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URL:  http://boards.fool.com/forget-trying-to-find-the-next-big-thing-find-a-30534565.aspx

Subject:  Re: The Case for Dividends Date:  2/10/2013  7:14 AM
Author:  StuyvesantGrad70 Number:  7825 of 9214

Forget trying to find the next big thing. Find a proven company with pricing power that generates a lot of cash. Then follow the cash. There are several possibilities:

1. The company generates a lot of cash and reinvests its cash back in its own business. This is OK as long as they can generate a lot of cash on the cash they reinvest in themselves. The cash is spent wisely and the business grows. This is the early growth phase of a great company. This can be great for shareholders, as long as the growth lasts, and if the company doesn't try to grow too fast.

2. The company generates a lot of cash but does not reinvest its cash in its own business. It cannot generate a lot of cash on the cash if it reinvests in itself. So it lets the cash build up on the balance sheet. This describes Apple today. The growth is great for shareholders, as long as it lasts, but the cash on the balance sheet is doing anything for them.

3. The company generates a lot of cash but does not reinvest its cash in its own business. It cannot generate a lot of cash on the cash if it reinvests in itself. Instead of letting cash build up on the balance sheet, it returns the cash to shareholders in buybacks and dividends. This describes the Philip Morris approach. This is great for shareholders, that is the point of the article. If the shareholder reinvests his dividends, his returns will increase, but that's not the point.

3 The company generates a lot of cash but does not reinvest its cash in its own business. Instead of letting cash build up on the balance sheet it reinves