How and Why Do Companies Pay Dividends?
How and Why Do Companies Pay Dividends?:
"Arguments Against Dividends
First, some financial analysts feel that the consideration of a dividend policy is irrelevant because investors have the ability to create 'homemade' dividends. These analysts claim that this income is achieved by individuals adjusting their personal portfolio to reflect their own preferences. For example, investors looking for a steady stream of income are more likely to invest in bonds (whose interest payments don't change), rather than a dividend-paying stock (whose value can fluctuate). Because their interest payments won't change, those who own bonds don't care about a particular company's dividend policy.
The second argument claims that little to no dividend payout is more favorable for investors. Supporters of this policy point out that taxation on a dividend is higher than on capital gain. The argument against dividends is based on the belief that a firm who reinvests funds (rather than pays it out as a dividend) will increase the value of the firm as a whole and consequently increase the market value of the stock. According to the proponents of the no-dividend policy, a company's alternatives to paying out excess cash as dividends are the following: undertaking more projects, repurchasing the company's own shares, acquiring new companies and profitable assets, and reinvesting in financial assets.
"
"Arguments Against Dividends
First, some financial analysts feel that the consideration of a dividend policy is irrelevant because investors have the ability to create 'homemade' dividends. These analysts claim that this income is achieved by individuals adjusting their personal portfolio to reflect their own preferences. For example, investors looking for a steady stream of income are more likely to invest in bonds (whose interest payments don't change), rather than a dividend-paying stock (whose value can fluctuate). Because their interest payments won't change, those who own bonds don't care about a particular company's dividend policy.
The second argument claims that little to no dividend payout is more favorable for investors. Supporters of this policy point out that taxation on a dividend is higher than on capital gain. The argument against dividends is based on the belief that a firm who reinvests funds (rather than pays it out as a dividend) will increase the value of the firm as a whole and consequently increase the market value of the stock. According to the proponents of the no-dividend policy, a company's alternatives to paying out excess cash as dividends are the following: undertaking more projects, repurchasing the company's own shares, acquiring new companies and profitable assets, and reinvesting in financial assets.
"
posted by Goldtruck at 11:55 AM
6 Comments:
One important thing to note regarding taxation of dividends: When President Bush decreased the tax rate on dividends during his first term the market had little to no reaction - reason being - portfolio managers long ago figured out that if they lever their funds to an appropriate amount the interest expense will offset any income from dividends and capital gains. Thus, allowing the portfolio to expand and reinvest cash flows and not take the tax hit. This is also known as the "dividend conversion game."
This comment has been removed by a blog administrator.
i sell internet marketing crap....read me.
Phil "Jackass" Coel
I subscribed in the Zenith Bank Public offer of March 2006. I received the shares certificate three months later. Since then I have not received any dividend from the investment. Is this normal? How do I go about getting my dividend
Hi,
Do you guys watch movies in theater or on internet? I use to rent DVD movies from [b]Blockbuster.com[/b]. Recently I discovered that we can watch all new movies on internet on day, they are released. So why should I spend money on renting movies??? So, can you guys please tell me where I can [url=http://www.watchhotmoviesfree.com]watch latest movie The Toxic Avenger 2010[/url] for free?? I have searched [url=http://www.watchhotmoviesfree.com]Youtube.com[/url], [url=http://www.watchhotmoviesfree.com]Dailymotion.com[/url], [url=http://www.watchhotmoviesfree.com]Megavideo.com[/url] but, Could not find a good working link. If you know any working link please share it with me.
Thanks
He also told me that he was going to introduce me to anew and very exciting lifestyle, a lifestyle of lust and pleasurewhere I was going to become a total women. But first I jumped naked into the pool towash off all that remained of John.
sexy wife fucking strangers stories
pre teen sex stories
sex stories post gay
lesbian sex stories
brother sister fuck stories
He also told me that he was going to introduce me to anew and very exciting lifestyle, a lifestyle of lust and pleasurewhere I was going to become a total women. But first I jumped naked into the pool towash off all that remained of John.
Post a Comment
<< Home