badonkus

> dividend yield that is crucial because you receive hard cash

1. that doesn't make any sense -- you can always convert retained earnings into "hard cash" by selling shares. this is simply a synthetic dividend.

> if you dissect long run returns to equities

2. there's a study which demonstrates that some large fraction of total shareholder return is composed of dividend payments. Be careful here. People regularly twist this finding into the conclusion "higher dividend payers produce greater TSR" -- wish I had a nickel for every time I've seen this on AF. I assume you can see the fault here.

> may be losing sight of something basic

3. Dividends are valued by one clientele: old retail investors. It's not a stretch to believe that they're not the sharpest investors. You can probably convince yourself why they like dividends.

4. Institutional investors, per a 2000s-era survey, dislike dividends (compared to share repurchase).

5. If you're a taxpayer, then you should dislike dividends. (We're currently in a temporary situation where the dividend tax penalty is diminished, but that's one one part of the general tax problem with dividends.)


Companies pay dividends because their peers pay dividends. Economically dividends don't benefit shareholders.