UnThreaded | Threaded | Whole Thread (8) | Ignore Thread Prev | Next
Author: kelbon Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8750  
Subject: Re: The Case for Dividends Date: 2/17/2013 8:30 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
I'm afraid I have to disagree with you on companies buying back stock. There are a few good reasons to do it such as get stock to give to deserving employees and decreasing the amount of stock a large amount might enable an increase in the dividend. However, most buybacks are a waste of money. Yes, it is true that it improves the P/E, but it is PROFITS that count, not P/E.* Buybacks are a phony way of "giving" something back to the stock holders and are a waste of money. It means that the company can't think of a profitable way of investing that money to increase profits.

Well, you could say that a company paying a dividend can't think of a profitable way of investing that money to increase profits too. And, in a lot of cases you wouldn't be far off on either count.

Yes, for the company, it's profits that count, but not necessarily to the same extent for investors. For investors it's the size of the pie that's more important; the percentage of the company they own. If that percentage rises because of buy-backs and reinvested dividends then they are likely better off. Some buy-backs are a waste of money simply because a company pays too much per share to buy 'em back.

kelbon
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (8) | Ignore Thread Prev | Next

Announcements

Motley Fool Income Investor
Are you a dividend-savvy investor? Check out our Income Investor newsletter.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement