No. of Recommendations: 5
This board's raison d'être is the desirability of rising dividends. For many people this also means the bigger the better. But, unless you absolutely need the most amount of money you can squeeze out of dividend paying stocks then capital appreciation should be a consideration too.

Often, when a company splits itself into two entities, or spins off a division, they will claim that this maneuver will enhance shareholder value. Sometimes this utterance is cynical, more likely though it's true.

It's tempting to sell the new company that pays a smaller dividend and reinvest that money in the other half with the big dividend. This isn't necessarily the best idea. For example, relatively recently, ConocoPhillips spun off Phillips66. ConocoPhillips retained the fat dividend and its scion Phillips66 pays a modest one. Not unlike the ABBV and ABT situation. Phillips66's share price has about doubled since the spin-off and surely some of those people who sold it straightaway now regret doing so. It's often (but not always) the case that when a "spin-off" is untethered it will fly.

If the combined yields of ABBV and ABT exceed the current rate then there's little reason to sell the new low-yielding ABT and every reason to wait and see if ABT will fly.

kelbon
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