# Why Companies Pay Dividends



## oldmontana (Sep 4, 2022)

https://www.thebalance.com/why-do-companies-pay-dividends-5185975

Part of link..

Why Do Companies Pay Dividends?​Dividends are one of two primary ways that investors earn money through stock investing; the other being capital gains. And while dividends can be enticing to investors, not all companies pay them. Let’s discuss why companies pay dividends, as well as a couple of reasons why a company might not.

Sharing Profits With Investors​Simply put, dividends are a way for companies to share their profits with investors. Companies can use dividends to reward investors and entice them to stick around. But for a company to share profits with investors, it must actually have profits to share. As a result, dividends are most common from well-established companies that generate consistent revenue. Stocks of such companies are usually known as income stocks and pay regular dividends.

Why Companies Don’t Pay Dividends​So, if dividends help to attract and maintain investors, why don’t all companies pay them? While there are solid reasons that companies choose to pay dividends, there are also good reasons why some don’t.


First, when companies pass their profits on to the shareholders, they aren’t reinvesting them back into the company. And ultimately, those reinvestments can help the company to grow, thereby increasing the stock price.


Dividends are less common among startups and other growing companies that must reinvest in the company to grow. These stocks, known as growth stocks, are often considered a good trade-off for investors because they expect significant capital gains.


=====================================================================

For me Dividends are a great way to invest  in good or great companies.  They keep paying during good or bad times.  During the down market we are in you do not need to sell stocks that are down and you can wait for the market to re-bond.  No need to sell stocks were you have big gains and pay income taxes on the gains.


----------



## mathjak107 (Sep 5, 2022)

The problem is that dividends have nothing to do with sharing profits .

dividends are paid by companies losing money right up until they fail .

dividends may come from profits , they may come from the sale of assets whether at a profit or a loss .

they may even come from money that is borrowed like Apple hospitality reits did .

they didn’t want to risk suspending the dividends when business was bad so they borrowed money and also used the money that was supposed to be buying more property .

rising dividends were once taken as a sign of good financial health ..a company that could keep giving you back more and more of your own money was looked at favorably by investors but that hasn’t been true for a long time .

many like the oil companies had pathetic returns for 15 years until just recently.however their long term returns still suck .

dividends are a forced withdrawal of your own money ..

they are handed back you and before that stock can trade are taken off the value of what you had the night before so it is no different then a new investor buying in with that much less money working for them .


.


----------



## mathjak107 (Sep 5, 2022)

good article for those who want to learn​https://www.chicagobooth.edu/review...ney-though-lots-investors-seem-think-they-are

​Dividends Are Not Free Money (Though Lots of Investors Seem to Think They Are)​
The Free Dividend Fallacy Could Be Costing You​
Investors should be indifferent to sources of return, after accounting for frictions such as taxes and trading costs. A $1 dividend from a share of stock should be no more meaningful than selling $1 worth of shares, as the share price on average drops by the amount of the dividend when it is paid. But Chicago Booth’s Samuel Hartzmark and University of Southern California’s David H. Solomon demonstrate that, in practice, many investors see a stock’s dividend as an income stream, separate from the price appreciation of the stock. The researchers call this the “free-dividends fallacy.”

A $1 dividend from a share of stock should be no more meaningful than selling $1 worth of shares, as the share price on average drops by the amount of the dividend when it is paid.

Investors caught up in the free-dividends fallacy mistakenly view dividend-paying stocks as bond coupons that produces small, stable gains over time. When investors trade based on a stock’s performance, they focus on whether the stock has gained or lost money relative to the purchase price. Ignoring the impact of dividends, they focus on price changes, not total return. However, investors who want to receive a dividend stream need to hold on to the stock until it pays out its regular dividend, and Hartzmark and Solomon find that investors tend to hang on to dividend-paying stocks for longer periods of time, regardless of performance.


----------



## Aunt Bea (Sep 5, 2022)

IMO there is absolutely nothing wrong with investing in mature companies that have a solid track record of paying dividends, as opposed to investing in companies primarily focused on growth.

Some people believe that is the difference between investing and speculating.

I choose to do a little of both.

The important thing is that we invest in things we understand and are comfortable with.

_“A cow for her milk
A hen for her eggs,
And a stock, by heck,
For her dividends.” - _John Burr Williams


----------



## mathjak107 (Sep 5, 2022)

_with 80% of all S&P stocks and 100% of all dow stocks paying them we all own them .

but it is import’s to understand that a div payment is not adding anything you already didn’t have pre ex div as far as more invested dollars .

there is a fallacy in believing that it is like interest and you suddenly have more when paid , or the most popular myth that in a down market you are being paid to wait  or reinvesting in a down market is adding some benefit you didn’t have the night before  …it is not _


----------



## oldmontana (Sep 5, 2022)

mathjak107 said:


> good article for those who want to learn​https://www.chicagobooth.edu/review...ney-though-lots-investors-seem-think-they-are
> 
> ​Dividends Are Not Free Money (Though Lots of Investors Seem to Think They Are)​
> The Free Dividend Fallacy Could Be Costing You​
> ...


A $1 dividend from a share of stock should be no more meaningful than selling $1 worth of shares, as the share price on average drops by the amount of the dividend when it is paid.

I see you are back to that which is true but in the long run does not mean the price of the stock will stay down. 

I know this because every dividend paying stock I have owned has gone up over the years. 

Not sure why you are so negative about dividends and the amount of time you put into trying to put they down.


----------



## mathjak107 (Sep 5, 2022)

I am not negative about dividends at all.

I am negative on the financial misinformation that posters have or spew about them .

There is a difference between correcting the myths about them vs not liking them .

I never said I don’t like them


----------



## HoneyNut (Sep 5, 2022)

Doesn't it depend on the behavior of a particular company though?  Such as Berkshire Hathaway doesn't pay dividend but reinvests in its business, so that would be an example of being good to not get the dividend, but I suspect a lot of companies if they were not paying the dividend might just distribute the extra profits to the top managers instead of reinvesting in the company, and also the business of the company needs to be able to actually use the profit wisely, just spending the money into the company doesn't mean it will really lead to more growth for that company.  

Now that I'm retired and need money to live on, I don't mind if the growth of a dividend paying company is less than a non-dividend, if it all equals out in the long run anyway I might as well not have to agonize over what to sell.

To me the dividend paying stock act like what I expected Bonds to do, they grow slow while providing income, but my bond funds are a huge disappointment, I don't understand why we are supposed to allocate a lot of our portfolio to bonds because the bond funds drop just like the equities but they don't rise ever much at all.


----------



## mathjak107 (Sep 5, 2022)

Stocks are stocks and they all carry risk .

whoever thought AT&T , GE , GM , ETC , WOULD TAKE THE HITS THEY DID .

exxon has been beaten by bonds for 15 years .

So stocks are no sub for bonds .

every asset has there day in and out of the sun .

for the last 40 years we only knew bonds to be in a bull market with only a few speed bumps .

no one saw a bear market in bonds for decades .

as far as owning bond funds , you need to know why you want to own bonds ….

people buy bond funds blindly .

Bonds or bond funds need to be bought the same way you would ladder CDs If they are for income .cor if it is for the recession / depression side of the cycle you need long term treasuries

that means very short term funds and some intermediate funds if for income  and long term treasuries for protection .

i think we will see a recession within a year and the fed will have no choice but to reverse course or risk being a Japan .

i just put the finishing touches on my long term bonds so they can fly fighter cover


----------



## mathjak107 (Sep 7, 2022)

oldmontana said:


> A $1 dividend from a share of stock should be no more meaningful than selling $1 worth of shares, as the share price on average drops by the amount of the dividend when it is paid.
> 
> I see you are back to that which is true but in the long run does not mean the price of the stock will stay down.
> 
> ...


just think of a mutual fund dividend which is the same thing .

you have 10k when you go to bed ,  the fund pays out 10% ..

if you reinvested the div you have the same 10k you had invested when you went to sleep.

if you take the dividend you have 1k in  hand and 9k growing .

you made a withdrawal .

it is a simple concept yet few understand the dividend is a withdrawal from their already existing balance .

dollar wise it’s a wash .

that doesnt mean your invested dollars don’t grow. ,they certainly grow but if you didn’t reinvest the dividend money back in you have a smaller portfolio growing for you .

far to many  think they are being handed something they didn’t already have in invested dollars and that is false thinking .

no different then a stock split is giving you nothing additional …more shares at a lower price is the same dollars working for you


----------



## mathjak107 (Sep 13, 2022)

for those who do care to learn , here is an excellent video on how things work


----------



## Liberty (Sep 13, 2022)

The market is tanking today...personally looking forward to our nice dividends coming this month...lol


----------



## mathjak107 (Sep 13, 2022)

Liberty said:


> The market is tanking today...personally looking forward to our nice dividends coming this month...lol


Don’t be , it tanks the stock by the same amount of the pay out On top of any market action .


----------



## Liberty (Sep 13, 2022)

Yeah, yeah, yeah, Math...think you've made your point over and over and over again.

What's new, already?!  How about giving us some great "stock tips" instead of beating the same 
old dividend ain't whatever  drum?


----------



## mathjak107 (Sep 13, 2022)

I don’t advise  people what to do … I can only talk in terms of what I do .

but I do find that dividends  is one of the biggest misunderstood things in investing and it is so fundamentally important for others to understand and be able to sort facts from these myths


----------



## Liberty (Sep 13, 2022)

mathjak107 said:


> I don’t advise  people what to do … I can only talk in terms of what I do .
> 
> but I do find that this is one of the biggest misunderstood things in investing and it is so fundamentally important for others to understand and be able to sort facts from these myths


Ok, guy...over and over and over again.  Its your opinion and I think even those here in the financial bleachers have even heard it.  Big yawn...time to move on...lol.


----------



## mathjak107 (Sep 13, 2022)

as long as people keep posting myths and misinformation I will dispute and correct it .

as far as it being my opinion , you are wrong ..it is fact and a finra requirement that every invested dollar be reduced by the payout before it can trade .

if you think that is my opinion , spin again.



It is a finra requirement..

(a) A member holding an open order from a customer or another broker-dealer shall, prior to executing or permitting the order to be executed, reduce, increase, or adjust the price and/or number of shares of such order by an amount equal to the dividend, payment, or distribution on the day that the security is quoted ex-dividend, ex-rights, ex-distribution, or ex-interest, except where a cash dividend or distribution is less than one cent ($0.01)


Exchange computers must knock everything down by an equal amount .

So effectively you have less dollars invested compounding then you had .

If you reinvest you simply have the same dollars compounding again


----------



## oldmontana (Sep 13, 2022)

mathjak107 said:


> for those who do care to learn , here is an excellent video on how things work


Who is this person? Who is paying him?

FYI...He says.  when a stock like say Walmart pays a div of $1 the stock price will go down that amount and STAY down that amount.  T That is not true.  Walmart and most dividend paying stocks go up. One just has to look at the stock price of a stock over the years,  the prices AFTER they pay out their dividends.

There are many reasons why stocks that pay dividends are a good thing and I am happy that I have much of my portfolio in div paying stocks that have gone up over the years.


----------



## mathjak107 (Sep 13, 2022)

oldmontana said:


> Who is this person? Who is paying him?
> 
> FYI...He says.  when a stock like say Walmart pays a div of $1 the stock price will go down that amount and STAY down that amount.  T That is not true.  Walmart and most dividend paying stocks go up. One just has to look at the stock price of a stock over the years,  the prices AFTER they pay out their dividends.
> 
> There are many reasons why stocks that pay dividends are a good thing and I am happy that I have much of my portfolio in div paying stocks that have gone up over the years.


Evidently you don’t understand either

Let’s pretend you have 100k in Walmart
It pays out a 10% dividend to make the numbers easy

It  goes ex div so you have 90k invested after the exchange adjustment in price so it can trade again and 10k in hand from the payment

next morning they released great news and markets doubled your stock
So you have 180k invested now and 10k in hand

that is 190k

had the stock not paid out you would have 200k not 190k

if you reinvested the 10k you have the same 200k as if it never paid out and went ex div .

it is a wash

your interpretation of that video couldn’t be more off base..

where did you ever come up with this Walmart wont recover the ex div drop ?


That is  as much nonsense as saying if you pulled the same dollars out of a portfolio the portfolio can never recover .

that is not what is said at all in the video.

the video is saying the same thing I am and that is you get no added invested value from the div .
it can’t be any different ..  you are only moving THE SAME money around different pockets


----------



## mathjak107 (Sep 13, 2022)

And this is why this topic doesn’t end .

the lack of understanding is incredible .case in point right above by the guy claiming the video said Walmart can never go back up ….


----------



## oldmontana (Sep 13, 2022)

oldmontana said:


> Who is this person? Who is paying him?
> 
> FYI...He says.  when a stock like say Walmart pays a div of $1 the stock price will go down that amount and STAY down that amount.  T That is not true.  Walmart and most dividend paying stocks go up. One just has to look at the stock price of a stock over the years,  the prices AFTER they pay out their dividends.
> 
> There are many reasons why stocks that pay dividends are a good thing and I am happy that I have much of my portfolio in div paying stocks that have gone up over the years.


----------------------------------------------

Who is this person? Who is paying him to misinform investers?


----------



## mathjak107 (Sep 13, 2022)

oldmontana said:


> ----------------------------------------------
> 
> Who is this person? Who is paying him to misinform investers?


I can’t help it if you don’t understand simple math and constantly try to raise stupid contradictions that make zero sense.

perhaps it’s a learning dis function  but you just make no sense in what you ask or say.

he is spot on regardless who is paying him and you are way out in left  field based on your Walmart comment .


----------



## oldmontana (Sep 13, 2022)

mathjak107 said:


> Don’t be , it tanks the stock by the same amount of the pay out On top of any market action .


. One just has to look at the stock price of a stock over the years, the prices AFTER they pay out their dividends.


----------



## mathjak107 (Sep 13, 2022)

oldmontana said:


> . One just has to look at the stock price of a stock over the years, the prices AFTER they pay out their dividends.


More nonsense .no one said a stock doesn’t go up because it pays a dividend .

if you understood the basics you would realize how ridiculous  you saying but  my stocks are higher over the years is .

it has nothing to do with the mechanics of a dividend and that by itself IT IS A WASH


----------



## oldmontana (Sep 13, 2022)

mathjak107 said:


> More nonsense .no one said a stock doesn’t go up because it pays a dividend .
> 
> if you understood the basics you would realize how ridiculous  you saying but  my stocks are higher over the years is .
> 
> it has nothing to do with the mechanics of a dividend and that by itself IT IS A WASH


You posted.."More nonsense .no one said a stock doesn’t go up because it pays a dividend ."
==============================

No, but your link does not mention that FACT, and you as far as I have read in your posts do not mention that.  You just go on and on about why div's are not good.

---------------------------

You posted.."if you understood the basics you would realize how ridiculous  you saying but  my stocks are higher over the years is ."

That is a fact. Call it what you want. By doing so its telling.

Enough is enough.  

Bye!


----------



## mathjak107 (Sep 13, 2022)

I stated it over and over in my example of the stock doubling .

you sir just don’t read


----------



## oldmontana (Oct 8, 2022)

Aunt Bea said:


> IMO there is absolutely nothing wrong with investing in mature companies that have a solid track record of paying dividends, as opposed to investing in companies primarily focused on growth.
> 
> Some people believe that is the difference between investing and speculating.
> 
> ...


With the market down I am happy that I have many dividend paying companies.  The dividends companies are continuing to pay the same $'s as they did before the stock market dive. It gives me money to spend or reinvest.  

I look for my stocks to come back in 6 months, one year, or two years.  Till then I will sit back and watch the dividends come in.


----------



## mathjak107 (Oct 8, 2022)

Would you say the same thing pulling money out of your portfolio while its down ?

surprise , there is no difference …dividends are withdrawals from your invested dollars …there is no difference spending those dividends vs pulling the same dollars out of your account.

you can draw the same dollars out of any money you have in anything ….you are just as down as any other stock and down even more after the payment or withdrawal.
this is the myth many buy in to because they don’t understand exactly what these withdrawals called dividends really are or what they represent.

don’t believe for a second you are in any better shape because the company is making that withdrawal for you


----------



## oldmontana (Oct 8, 2022)

oldmontana said:


> don’t believe for a second you are in any better shape because the company is making that withdrawal for you


============================

I will give you credit for your same old song and dance about dividends.

My dividend paying stocks are up today after the hit on stocks 30% to over 300% of the price I purchased them at.  That does not account for the dividends I have recieved.

If you do not want to share in the profits of companies so be it.  FYI..Companies decide what they will do with their profits.  Most if not all that pay dividends do not, yes do not pay all their profits to stockholders


----------



## mathjak107 (Oct 8, 2022)

Stop with your nonsense ..dividends are just cash returned to you from the company cash register and subtracted off your balance …..they are nothing you can’t do yourself from a portfolio of non div payers

You repeat the same misinformation over and over .all that matters is your total return , not how you withdraw that money out..

I have fidelity funds down only 13% ytd that pays almost no dividends while dividend paying spy is down 22% or so.

so it  is about total return not  how much is Withdrawn as a dividend


----------



## oldmontana (Oct 8, 2022)

mathjak107 said:


> Stop with your nonsense ..dividends are just cash returned to you from the company cash register and subtracted off your balance …..they are nothing you can’t do yourself from a portfolio of non div payers
> 
> You repeat the same misinformation over and over .all that matters is your total return , not how you withdraw that money out..
> 
> ...



===========================================================
.dividends are just cash returned to you from the company cash register and subtracted off your balance

 "subtracted off your balance"

That is not true . You continue to post again and again how little you understand why companies pay dividends.


----------



## mathjak107 (Oct 9, 2022)

Sorry ,it is you that does not understand a dividend is a withdrawal of your own existing funds .

it is not profits , it is an amount designated by a board .

it can come from borrowed money , asset sales , profits , or any source the company chooses ..it is not giving you a penny more then you had existing before it went ex div ..it is a withdrawal .

companies can  lose money for years and pay out .

so please stop posting misinformation..it is  bad enough you don’t understand it is  giving you nothing and is subtracted from your dollars being compounded on  without misleading others


----------



## mathjak107 (Oct 9, 2022)

oldmontana said:


> You posted.."More nonsense .no one said a stock doesn’t go up because it pays a dividend ."
> ==============================
> 
> No, but your link does not mention that FACT, and you as far as I have read in your posts do not mention that.  You just go on and on about why div's are not good.
> ...





oldmontana said:


> Bye!


I have been spending down my portfolio to live for more than 7 years taking withdrawals and it is higher today then the day I retired 


Dividends or not has nothing to do with investments being worth more  then they were   
They would be just worth more then they are without withdrawals from spending dividends or share value


----------



## mathjak107 (Oct 9, 2022)

More gibberish ..

Dividend income is taxed on the entire dividend …when THE SAME INCOME is generated via gains instead you only pay tax on the gain portion not the entire amount  like the dividend .

So your tax comparison above is the opposite then you said with dividends taxed higher ..

One  can draw the same income from a portfolio in good and bad times and have the same balance .
The company taking a share price hit with every dividend payout in addition to the market hits in a down market are just as painful .

You just keep showing your financial ignorance with each post


----------



## Timewise 60+ (Oct 9, 2022)

If you are an investor, and the only thing you look at in the stock market is 'dividends' you will miss the many other opportunities available to prudent investors.

I agree with others, you have made you point on dividends!  Move on...


----------



## mathjak107 (Oct 9, 2022)

It isn’t even a case of good stock or bad stock to buy or own .

it is a case of misthinking if one thinks nothing is being sold off from your account to pay out that dividend in a down market .

it is no different then taking money out of your portfolio in a down market .

it comes right out of the company cash register and on top of the market action , your dollars invested are reduced down farther automatically by the same amount withdrawn ..

since markets compound on dollars you are no different with that new lower balance starting out then someone first buying in with that  same amount of money.

that payment is not on top of your balance you had , it is subtracted out and handed to you and your balance reduced by the same.

there is no such thing as getting paid to wait .

you see how many here don’t understand how things work yet argue with misinformation

at&t is paying a 7-1/2% dividend and including dividends is down 24% the last year …so much for the myth getting paid to wait


----------



## oldmontana (Oct 10, 2022)

Timewise 60+ said:


> If you are an investor, and the only thing you look at in the stock market is 'dividends' you will miss the many other opportunities available to prudent investors.
> 
> I agree with others, you have made you point on dividends!  Move on...


That is true. 

The thing is that a company has to do something with their profits.  There are many ways they can use that money like paying dividends and expanding the company or like one poster keeps saying is to cushion their balance sheet by increasing their  cash on hand.

Most companies understand that when a person purchase  a part of their company with stock that pay dividends they expect to get dividends.  I do.


----------



## mathjak107 (Oct 10, 2022)

Stock buybacks  were the best thing they could do coffee it was a choice of that or a dividend

paying it as a dividend gave shareholders no extra money that they did not have the night before the ex div . It drives a stock price down by an equal amount before it can trade

on the other hand a stock buy back increases share prices most of the time as less shares are available to the public


----------



## oldmontana (Oct 11, 2022)

mathjak107 said:


> coffee





mathjak107 said:


> Stock buybacks  were the best thing they could do coffee it was a choice of that or a dividend
> 
> paying it as a dividend gave shareholders no extra money that they did not have the night before the ex div . It drives a stock price down by an equal amount before it can trade
> 
> on the other hand a stock buy back increases share prices most of the time as less shares are available to the public


===========================
 coffee?

https://www.msnbc.com/rachel-maddow...leaders-remain-literally-speechless-rcna51479
How Will the Buyback Affect Your Company’s Value?​Contrary to the common wisdom, buybacks don’t create value by increasing earnings per share. The company has, after all, spent cash to purchase those shares, and investors will adjust their valuations to reflect the reductions in both cash and shares, thereby canceling out any earnings-per-share effect. If increasing earnings per share were the only rationale for buybacks, they would have no impact on value—which, as we’ve seen, is certainly not the case


----------



## mathjak107 (Oct 11, 2022)

oldmontana said:


> ===========================
> coffee?
> 
> https://www.msnbc.com/rachel-maddow...leaders-remain-literally-speechless-rcna51479
> How Will the Buyback Affect Your Company’s Value?​Contrary to the common wisdom, buybacks don’t create value by increasing earnings per share. The company has, after all, spent cash to purchase those shares, and investors will adjust their valuations to reflect the reductions in both cash and shares, thereby canceling out any earnings-per-share effect. If increasing earnings per share were the only rationale for buybacks, they would have no impact on value—which, as we’ve seen, is certainly not the case


Not how things seem to actually play out with buy backs in actual studies.

what the studies showed


Greater Liquidity: Companies repurchasing stock provides substantial liquidity that facilitates orderly trading and reduces transaction costs for retail investors.
Reduced Volatility: Stock buybacks significantly reduce realized and anticipated return volatility. Imposing limitations on buyback activity would increase stock market volatility and force retail investors to bear greater amounts of downside risk.
Retail Investors Impact: Stock buybacks generate an economically large benefit for retail investors. Since 2004, buybacks have saved retail investors $2.1–4.2 billion in transaction and price impact costs.
Proactive Repurchase Activity: Managers utilize market-based estimates of future volatility to inform their buyback decisions. When volatility is expected to be higher, managers increase their buyback intensity to stabilize stock prices, thus reducing costs for retail investors.
Response To Uncertainty: Studies show that economic policy uncertainty increases stock price volatility and illiquidity. Managers respond to elevated policy uncertainty by strengthening their buyback activities. Retail investors benefit from price certainty about the value of their investments during periods of greater uncertainty.
Strategic Liquidity Supplier: Managers expand stock buyback activity during critical periods when investors sell relatively large amounts of shares. Thus, managers use buybacks to actively mitigate price pressure during periods of net selling pressure.


https://business.vanderbilt.edu/new...positive-impact-on-stock-price-stabilization/


----------



## Timewise 60+ (Oct 11, 2022)

mathjak107 said:


> Stock buybacks  were the best thing they could do coffee it was a choice of that or a dividend
> 
> paying it as a dividend gave shareholders no extra money that they did not have the night before the ex div . It drives a stock price down by an equal amount before it can trade
> 
> on the other hand a stock buy back increases share prices most of the time as less shares are available to the public


Most of what you print here is wrong!  Stock values are not directly tied to cash or the number of outstanding shares.  Dividends may or may not impact a stocks market value.  A stock value will increase or decrease solely on demand or lack of, for that stock.  Etc. etc....


----------



## mathjak107 (Oct 11, 2022)

Timewise 60+ said:


> Most of what you print here is wrong!  Stock values are not directly tied to cash or the number of outstanding shares.  Dividends may or may not impact a stocks market value.  A stock value will increase or decrease solely on demand or lack of, for that stock.  Etc. etc....


No , it’s you that is wrong .

dividends directly effect a stocks price  ..when a stock goes ex div exchange computers automatically reduce your starting balance  being compounded on by markets by the same amount paid out .

see my example if you don’t understand why it directly effects your future compounding .


As an example if you have a 100 dollars invested and the stock pays 10% , when the stock goes ex div you get 10 bucks in hand and the mandatory price roll back leaves you with 90 dollars invested .

If the stock market doubled that stock you have 180 in the investment and 10 bucks in hand , so you have 190 .


If you reinvested the 10 bucks you have the same 100 back you had before it went. Ex div and if it doubles that is 200 dollars in value .

That is the same balance you would have had if the stock never went ex div and you never had reinvested the pay out

It’s a wash .


You are no different than pulling 10% out of a portfolio of non div payers and deciding you don’t need the money so you put it back.

so YES , DIVIDENDS EFFECT THE DOLLARS LEFT  COMPOUNDING BY THE MARKETS.

there is alway a reduction in what you have left for markets to compound on before the stock can trade  By reducing the share price ..

like i said , if the next day the market doubled your investment it is on less dollars invested then you had ..if you reinvested the div then you have the same dollars working for you that you had before the stock went ex dive .

just think of a stock fund dividend .

you go to sleep with 100k invested and the stock pays out a dividend ,you have the dividend in cash and your invested dollars are worth just that much less AS EACH SHARE  PRICE IS REDUCED BY THE SAME AMOUNT

if you reinvested then you have the same amount you had when you went to bed.

you just have more shares at a lower price equalling the same 100k ….if the markets doubled you have the same 200k if you reinvested as you would have if the fund never paid out.

to say the paying of a dividend does not effect share price is just another case of you believing the same misinformation


----------



## mathjak107 (Oct 11, 2022)

Here is the requirement that the share price and hence your dollars being acted on by the markets must be reduced before the stock or fund can trade.

and market action cannot make up for the reduction each time in the sense that you are withdrawing money out when you get the dividend just like taking money out of a portfolio.

your invested dollars will always be less then had you not withdrawn anything …

like my example shows , if you had 100 invested and it doubled you have 200

if you had 100 invested and it paid a 10% dividend you have 90 invested and 10 bucks in hand , if it doubled you have 180 in the investment and 10 bucks in hand for a total of 190 not 200

so you can either learn something , or just go on believing your own bull sh%t that the share price is not effected by dividend payouts

5330. Adjustment of Orders​The RuleNotices
(a) A member holding an open order from a customer or another broker-dealer shall, prior to executing or permitting the order to be executed, reduce, increase, or adjust the price and/or number of shares of such order by an amount equal to the dividend, payment, or distribution on the day that the security is quoted ex-dividend, ex-rights, ex-distribution, or ex-interest, except where a cash dividend or distribution is less than one cent ($0.01),


----------



## oldmontana (Oct 11, 2022)

mathjak107 said:


> Stock buybacks  were the best thing they could do coffee it was a choice of that or a dividend
> 
> paying it as a dividend gave shareholders no extra money that they did not have the night before the ex div . It drives a stock price down by an equal amount before it can trade
> 
> on the other hand a stock buy back increases share prices most of the time as less shares are available to the public


------------------------------------------------------------------------------------------------------------

"Stock buybacks  were the best thing they could do coffee it was a choice of that or a dividend"

Your opinion is just that.  

Again..
How Will the Buyback Affect Your Company’s Value?​Contrary to the common wisdom, buybacks don’t create value by increasing earnings per share. The company has, after all, spent cash to purchase those shares, and investors will adjust their valuations to reflect the reductions in both cash and shares, thereby canceling out any earnings-per-share effect. If increasing earnings per share were the only rationale for buybacks, they would have no impact on value—which, as we’ve seen, is certainly not the case.

No impact on value.  Got that?


----------



## mathjak107 (Oct 11, 2022)

oldmontana said:


> ------------------------------------------------------------------------------------------------------------
> 
> "Stock buybacks  were the best thing they could do coffee it was a choice of that or a dividend"
> 
> ...


Read the study I posted instead of posting the same generic  article with no actual facts  to back up what they say over and over …they found that to be not the case and there is an effect from buy backs.

THAT IS  NOT MY OPINION …IT is a study based on studying 10,000 stocks over 17 years and it is their conclusion not mine.

GOT THAT ?


----------



## oldmontana (Oct 11, 2022)

mathjak107 said:


> Read the study I posted instead of posting the same generic  article with no actual facts  to back up what they say over and over …they found that to be not the case and there is an effect from buy backs.
> 
> THAT IS  NOT MY OPINION …IT is a study based on studying 10,000 stocks over 17 years and it is their conclusion not mine.


It might not be your opinion but you posted this which is your opinion...

"Stock buybacks were the best thing they could do coffee it was a choice of that or a dividend"



That is not always the case. I poved that in my link. 

This thread is ..
Why Companies Pay Dividends​I posted that because it has good information in it and you came out with a chip on your shoulder for reasons I have yet to understand.


----------



## Timewise 60+ (Oct 11, 2022)

mathjak107 said:


> No , it’s you that is wrong .
> 
> dividends directly effect a stocks price  ..when a stock goes ex div exchange computers automatically reduce your starting balance  being compounded on by markets by the same amount paid out .
> 
> ...


Read 
Why Companies Pay Dividends​
You are lost in the fog!


----------



## mathjak107 (Oct 11, 2022)

Timewise 60+ said:


> Read
> Why Companies Pay Dividends​
> You are lost in the fog!


Sorrry pal ..you are just wrong when you say paying out dividends has no effect on share price .

do you  have a reading comprehension problem or is it a low aptitude for math..that may be the problem


----------



## mathjak107 (Oct 11, 2022)

oldmontana said:


> It might not be your opinion but you posted this which is your opinion...
> 
> "Stock buybacks were the best thing they could do coffee it was a choice of that or a dividend"
> 
> ...


It is generl information with no real studies done on the actual effect ….it takes none of what the study of 10,000 stocks showed to be absolutely value added


----------



## oldmontana (Oct 11, 2022)

mathjak107 said:


> It is generl information with no real studies done on the actual effect ….it takes none of what the study of 10,000 stocks showed to be absolutely value added


You do have a big, big problem accepting others information.

You started posting on this thread with your attitude that you know it all.  You do not.


----------



## mathjak107 (Oct 11, 2022)

oldmontana said:


> You do have a big, big problem accepting others information.
> 
> You started posting on this thread with your attitude that you know it all.  You do not.


I don’t know sh#t …but I do know who the smartest people on the subject are and I learn from them .

you on  the other hand just go on believing your own bull sh*t and dont want to learn …you keep parroting the same incomplete article and don’t even look at the math of what is really going on when dividends are paid ,or the finra rules that demand that  share prices are reduced and dividends are a wash


----------



## mathjak107 (Oct 11, 2022)

Here is a complete explanation of the dividend process for those who actually want to learn and not just run on what they think.

https://www.scantips.com/dividends.html


----------



## oldmontana (Oct 11, 2022)

mathjak107 said:


> I don’t know sh#t …but I do know who the smartest people on the subject are and I learn from them .
> 
> you on  the other hand just go on believing your own bull sh*t and dont want to learn …you keep parroting the same incomplete article and don’t even look at the math of what is really going on when dividends are paid ,or the finra rules that demand that  share prices are reduced and dividends are a wash


It is telling when you get nasty and said this.."you on  the other hand just go on believing your own bull sh*t and dont want to learn"

Enough of your nasty posts to me when you do not have any respect for the links I provided to help you out and the fact you do not respect any opinion that proved you wrong.


----------



## Mitch86 (Oct 11, 2022)

Dividends are bad since we have to pay income tax on them.  On the other hands unrealized capital gains are never taxed. At death all capital gains taxes are forgiven. The heirs start with a cost value equal to the value at death.


----------



## oldmontana (Oct 11, 2022)

oldmontana said:


> https://www.thebalance.com/why-do-companies-pay-dividends-5185975
> 
> Part of link..
> 
> ...


I have requested to have this thread removed as its getting to be a shouting match by one know it all poster which is or was not the attention of my thread.


----------

