| > You seem to be unaware that different investors have different investment goals. No, investors only have one goal: total returns. Anything else makes no sense. After all a stock that issues a $5 dividend and goes down $10 ain't worth investing in, is it? > Yeah, no. Some investors want dividends, some want gains, some are more concerned with security of principle, some optimize for total return. This is taught in finance 101. All are gains. At the end the day there's one bucket of money. you're saying it matters how you apportion it, and I'm telling you it does not. If you hold 100 shares and a company that doesn't issue a dividend, but went up 1%, you can sell 1 share to obtain a 1% dividend. Or you can wait for them to issue a 1% divided and be left with 99% the value. It's a no-op. Same thing. You've failed at basic math here. There's one bucket of money. Dividends don't appear out of thin air. > It depends. Sometimes the price goes up because they have shown that they are in a position for the owners to take profit. Sometimes it goes down because shareholders want to reinvest their capital elsewhere and its timely to do this immediately after dividend receipt (because you’re not waiting for the next dividend). No. You are strictly wrong. When a dividend is issued the stock goes down by that amount. [1] After a stock goes ex-dividend, the share price typically drops by the amount of the dividend paid to reflect the fact that new shareholders are not entitled to that payment.
> I’m glad you understand this. Now based on this, can you see why some investors would prefer dividends and some would prefer capital gains?Yes, but you have it wrong. Dividends are less valuable because they offer no flexibility in recognition date. Either way they are both treated as capital gains. In fact, I believe, correct me if I'm wrong, dividends are treated as ordinary income. On the other hand if you sell something you've held for 1 year in lieu you'll get long-term capital gains treatment. > Really now, this is rich. If you think my perspective is that outlandish then you truly have not studied this to any great extent. I'm an investor. I suggest you revisit ECON-101. [1] https://www.investopedia.com/articles/investing/091015/how-d.... |
You’re misinformed. There are 3 considerations: dividend yield, capital gain, and security of principle.
> Both are gains. If you hold 100 shares and a company doesn't issue a dividend you can sell 1 share to obtain a 1% dividend. Or you can wait for them to issue a 1% divided and be left with 99% the value. It's a no-op. Same thing. You've failed at basic math here.
Owning cash isn’t the same as owning a business and almost everyone understands that. I’m not sure if you’re really this clueless or you’re trying to gaslight me, either way you’re wrong.
> No. You are strictly wrong. When a dividend is issued the stock goes down by that amount. [1]
> After a stock goes ex-dividend, the share price typically drops by the amount of the dividend paid to reflect the fact that new shareholders are not entitled to that payment.
> strictly
> typically
You don’t seem to understand the subject based on this exchange. Do you realize that’s not a rebuttal to what I said?
> No dividends are less valuable because they offer no flexibility in recognition date.
So if they are less valuable then you understand that some investors would prefer them less, and this is not the same as only caring about total returns?
> In fact, I believe, correct me if I'm wrong, dividends are treated as ordinary income. On the other hand if you sell something you've held for 1 year in lieu you'll get long-term capital gains treatment.
So you do understand that they are different, and investors care about more than total return?