Comments on: Companies Changing Over Time http://www.moneysmartsblog.com/companies-changing-over-time/ Investing and Personal Finance Sat, 31 Jul 2010 15:45:55 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Dividend Growth Investor http://www.moneysmartsblog.com/companies-changing-over-time/comment-page-1/#comment-8478 Dividend Growth Investor Sun, 12 Oct 2008 19:52:48 +0000 http://www.moneysmartsblog.com/?p=1362#comment-8478 I agree with Mr Cheap that generally a company should consider paying out a portion of its profits as dividends to shareholders. The problem with retaining all of the profits to the company is troublesome in the real world since most probably the money gets spend on projects/acquisitions which yield terrible results. In addition to that a company cannot grow forever at the same pace and earn the same returns on equity as before. Thus a distribution of porfits in terms of dividends make sense. During bear markets getting some sort of a return when your stock price is down the toilet is always a positive sign. And last but not least over the past 30 years it had paid to own dividend payers in the USA. Check out this total returns chart: http://www.dividend.com/img/dividend-graph.jpg Best Regards, Dividend Growth Investor I agree with Mr Cheap that generally a company should consider paying out a portion of its profits as dividends to shareholders. The problem with retaining all of the profits to the company is troublesome in the real world since most probably the money gets spend on projects/acquisitions which yield terrible results. In addition to that a company cannot grow forever at the same pace and earn the same returns on equity as before. Thus a distribution of porfits in terms of dividends make sense.
During bear markets getting some sort of a return when your stock price is down the toilet is always a positive sign.

And last but not least over the past 30 years it had paid to own dividend payers in the USA. Check out this total returns chart:

http://www.dividend.com/img/dividend-graph.jpg

Best Regards,
Dividend Growth Investor

]]> By: Four Pillars http://www.moneysmartsblog.com/companies-changing-over-time/comment-page-1/#comment-8421 Four Pillars Thu, 09 Oct 2008 23:30:30 +0000 http://www.moneysmartsblog.com/?p=1362#comment-8421 I always end up in the spammer when I comment at work. I'd like to try a different spam filter some time. Akismet never seems to learn anything.... I always end up in the spammer when I comment at work. I’d like to try a different spam filter some time. Akismet never seems to learn anything….

]]> By: Mr. Cheap http://www.moneysmartsblog.com/companies-changing-over-time/comment-page-1/#comment-8415 Mr. Cheap Thu, 09 Oct 2008 19:19:07 +0000 http://www.moneysmartsblog.com/?p=1362#comment-8415 hmm, for some strange reason your concession ended up in the akismet spam comment bin. I rescued it though! ;-). Is this wordpress' way of saying it wants us to keep arguing? :-) hmm, for some strange reason your concession ended up in the akismet spam comment bin. I rescued it though! ;-) .

Is this wordpress’ way of saying it wants us to keep arguing? :-)

]]> By: Four Pillars http://www.moneysmartsblog.com/companies-changing-over-time/comment-page-1/#comment-8410 Four Pillars Thu, 09 Oct 2008 16:35:06 +0000 http://www.moneysmartsblog.com/?p=1362#comment-8410 All right - you win! :) All right – you win! :)

]]> By: Mr. Cheap http://www.moneysmartsblog.com/companies-changing-over-time/comment-page-1/#comment-8407 Mr. Cheap Thu, 09 Oct 2008 15:05:52 +0000 http://www.moneysmartsblog.com/?p=1362#comment-8407 There's an implicit promise with BRK that when / if the run of incredible returns ends (perhaps when the old man is gone), they'll start returning cash to investors. W.B. hasn't said he'll NEVER pay out a dividend: "We feel noble intentions should be checked periodically against results. We test the wisdom of retaining earnings by assessing whether retention, over time, delivers shareholders at least $1 of market value for each $1 retained. To date, this test has been met. We will continue to apply it on a five-year rolling basis. As our net worth grows, it is more difficult to use retained earnings wisely." Source: Berkshire Hathaway's Owner's Manual Mr. Buffett:: "We will either pay large dividends or none at all if we can't obtain more money through re-investment (of those funds). There is no logic to regularly paying out 10% or 20% of earnings as dividends every year." There’s an implicit promise with BRK that when / if the run of incredible returns ends (perhaps when the old man is gone), they’ll start returning cash to investors. W.B. hasn’t said he’ll NEVER pay out a dividend:

“We feel noble intentions should be checked periodically against results. We test the wisdom of retaining earnings by assessing whether retention, over time, delivers shareholders at least $1 of market value for each $1 retained. To date, this test has been met. We will continue to apply it on a five-year rolling basis. As our net worth grows, it is more difficult to use retained earnings wisely.”
Source: Berkshire Hathaway’s Owner’s Manual

Mr. Buffett:: “We will either pay large dividends or none at all if we can’t obtain more money through re-investment (of those funds). There is no logic to regularly paying out 10% or 20% of earnings as dividends every year.”

]]> By: Four Pillars http://www.moneysmartsblog.com/companies-changing-over-time/comment-page-1/#comment-8403 Four Pillars Thu, 09 Oct 2008 11:00:49 +0000 http://www.moneysmartsblog.com/?p=1362#comment-8403 What about BRK? Is Buffett stealing everyone's money because he'll never pay out a dividend? What about BRK? Is Buffett stealing everyone’s money because he’ll never pay out a dividend?

]]> By: Mr. Cheap http://www.moneysmartsblog.com/companies-changing-over-time/comment-page-1/#comment-8399 Mr. Cheap Thu, 09 Oct 2008 03:08:35 +0000 http://www.moneysmartsblog.com/?p=1362#comment-8399 Mike: *EXACTLY!* Eventually it either crashes, or it grows up to become a mature dividend payer (that’s the “what I’m saying is that at SOME POINT the company has to pay money back to shareholders for it to be worth anything” I was talking about a few comments back).

They don’t agree to never give any money back to their shareholders. They agree not to give it back until they can’t grow it at a high rate any more.

]]> By: Four Pillars http://www.moneysmartsblog.com/companies-changing-over-time/comment-page-1/#comment-8397 Four Pillars Thu, 09 Oct 2008 01:49:58 +0000 http://www.moneysmartsblog.com/?p=1362#comment-8397 <i>All you have to do is agree that I never have to give any money back to you or anyone you sell them to.</i> That's the definition of a growth stock. Of course most growth stocks eventually either crash and burn or grow up to become mature dividend players. All you have to do is agree that I never have to give any money back to you or anyone you sell them to.

That’s the definition of a growth stock. Of course most growth stocks eventually either crash and burn or grow up to become mature dividend players.

]]> By: Mr. Cheap http://www.moneysmartsblog.com/companies-changing-over-time/comment-page-1/#comment-8396 Mr. Cheap Thu, 09 Oct 2008 00:59:18 +0000 http://www.moneysmartsblog.com/?p=1362#comment-8396 Sweet. I've got some great investment products to sell you guys! All you have to do is agree that I never have to give any money back to you or anyone you sell them to. Heck, I'll even increase their "value" 30% per year!!! Feel free to e-mail as much money as you want to cheapcanuck@gmail.com Sweet. I’ve got some great investment products to sell you guys! All you have to do is agree that I never have to give any money back to you or anyone you sell them to. Heck, I’ll even increase their “value” 30% per year!!!

Feel free to e-mail as much money as you want to cheapcanuck@gmail.com

]]> By: mjw2005 http://www.moneysmartsblog.com/companies-changing-over-time/comment-page-1/#comment-8395 mjw2005 Thu, 09 Oct 2008 00:56:56 +0000 http://www.moneysmartsblog.com/?p=1362#comment-8395 I totally understand where your coming from Mr. Cheap...in regards to getting income for your ownership...but I disagree that just because a company never pays a dividend you the owner of the share never gains....if the company was wise with its investment of its equity than more than likely you would have a share that had increased in value considerably and you could sell all of your shares or a portion if you wanted to get your money from the company.... I totally understand where your coming from Mr. Cheap…in regards to getting income for your ownership…but I disagree that just because a company never pays a dividend you the owner of the share never gains….if the company was wise with its investment of its equity than more than likely you would have a share that had increased in value considerably and you could sell all of your shares or a portion if you wanted to get your money from the company….

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