Long Term Dividend Growth

  • Posted: 21 February 2012 11:11 PM #16

    jumar - 21 February 2012 10:10 PM
    Boughtnheld - 21 February 2012 09:31 PM

    I have had a number of friends who are small investors tell me that “Apple is too expensive for me.” I then explain that a $10K investment in Apple costs exactly as much as a $10K investment in Microsoft or anyone else, but they still have a difficult time getting past the high stock price.

    Granted, these are small investors who probably wouldn’t make much of a dent in APPL’s price, but I would think that there are even a number of larger investors who should know better but can’t get past the 500+ price, thinking they have missed the big run-up and they’ll be smart by not buying high.

    A couple of times I have even heard the business media say “the easy money has already been made on Apple.” I’m not sure they would say that if the price was down around $100.

    I agree. I’ve got friends and family who think this way too. Additionally, if you had $1000 to invest, you can currently afford 1 share, leaving $486 that can only be spent on other stocks or cash. If the stock price were lower, you could get closer to fully invested in AAPL.

    I don’t think that has any impact on how the company works, but even though the entry-level shareholder might not make a huge dent, making the stock more affordable to entry level shareholders is a good thing in my opinion.

    My hunch is that there will be a bit of a buy-back, a dividend AND a 4-1 split.

    .

    There are other reasons too: some brokers charge different fees for ” odd lots”
    Have you ever tried selling covered call on 26 shares? Exactly, you cant
    Can you sell a put and wait for better price on 14 shares?
    Can you be diversified with say 5% max for each company when one lot is 50k ?
    One would have to buy single digit shares if he’s investing say 40k total
    Imagine someone able to invest 100$ a check hoping to build portfolio after his first job, waiting 3 months before he can buy one share?
    Seems to me there are many rich investors here who forgot times when they ere starting..
    High nominal share price is like a luxury car, price says its not for everyone..and people just know its not for them.

         
  • Posted: 22 February 2012 01:09 PM #17

    Analysts are such pigs. THEY want and are feeding the media that Apple should PAY a dividend. ALL they want is the money - nothing else. IF APPLE does ANYTHING at all, a share buy-back would be the best. At least that would keep the parasitic Wall Street Klans out of our face…

         
  • Avatar

    Posted: 22 February 2012 02:15 PM #18

    Regarding a split, I agree with the reasoning of those who argue for one, so no need to repeat anything. What’s interesting is that I never hear an argument that’s actually against a split. At most, I’ve heard that it’s not necessary, or that the psychological advantage only helps the clueless little guy who can’t make a difference anyway, so why do it. Well, why NOT do it? Can anyone talk about a meaningful downside to a split? I don’t mean that to sound like a challenge - I’m genuinely interested.

    Otherwise, it seems to me that with some empirical evidence that it may help, and no reason that it could actually hurt, that splitting the stock is at worst a “nothing to lose” situation.

    Signature

    Brian

    It depends on what you look at, obviously,
    But even more it depends on the way that you see

         
  • Avatar

    Posted: 22 February 2012 03:10 PM #19

    bweels - 22 February 2012 06:15 PM

    Regarding a split, I agree with the reasoning of those who argue for one, so no need to repeat anything. What’s interesting is that I never hear an argument that’s actually against a split. At most, I’ve heard that it’s not necessary, or that the psychological advantage only helps the clueless little guy who can’t make a difference anyway, so why do it. Well, why NOT do it? Can anyone talk about a meaningful downside to a split? I don’t mean that to sound like a challenge - I’m genuinely interested.

    Otherwise, it seems to me that with some empirical evidence that it may help, and no reason that it could actually hurt, that splitting the stock is at worst a “nothing to lose” situation.

    I can’t quite remember, but I vaguely recall an argument about the difference that will occur in volatility from a split. Because a lower price per share will mean more change in percentage terms for each cent change in stock price…or something like that.

    Signature

    Full Disclosure:

    - Long Apple
    - Pro: Apple HDTV, iPhone Air, Stock split, Consumer robotics

         
  • Avatar

    Posted: 22 February 2012 03:20 PM #20

    bweels - 22 February 2012 06:15 PM

    Regarding a split, I agree with the reasoning of those who argue for one, so no need to repeat anything. What’s interesting is that I never hear an argument that’s actually against a split. At most, I’ve heard that it’s not necessary, or that the psychological advantage only helps the clueless little guy who can’t make a difference anyway, so why do it. Well, why NOT do it? Can anyone talk about a meaningful downside to a split? I don’t mean that to sound like a challenge - I’m genuinely interested.

    Otherwise, it seems to me that with some empirical evidence that it may help, and no reason that it could actually hurt, that splitting the stock is at worst a “nothing to lose” situation.

    Interesting question.

    I assume it would take resources by Apple to track the change, contact the shareholders and generate paperwork. If so, one downside is spending time, money and resources for what may be of negligable effect.

    Signature

    Waiting to be included in one of Apple’s target markets, but I still own an iPod, iPhone and iMac and APPL stock.

         
  • Posted: 22 February 2012 03:39 PM #21

    bweels - 22 February 2012 06:15 PM

    Regarding a split, I agree with the reasoning of those who argue for one, so no need to repeat anything. What’s interesting is that I never hear an argument that’s actually against a split. At most, I’ve heard that it’s not necessary, or that the psychological advantage only helps the clueless little guy who can’t make a difference anyway, so why do it. Well, why NOT do it? Can anyone talk about a meaningful downside to a split? I don’t mean that to sound like a challenge - I’m genuinely interested.

    Otherwise, it seems to me that with some empirical evidence that it may help, and no reason that it could actually hurt, that splitting the stock is at worst a “nothing to lose” situation.

    One thing I’ve been pondering…

    Assuming a split didn’t make a difference in the share price (which I think it would), I think it could have a negative impact on options trading. For one, in order to accrue the same dollar value in options, one would have to buy 2, 4 or 10 times more contracts, which really bumps up the commissions.

    The needs of options traders are certainly not something anyone should be concerned with though.

    Also, while I realize that a split should apply directly to options (ie. just do everything in larger batches and everything should be the same), I feel like it could change the strategy a little. This is an irrational feeling I think, but I still have it.

         
  • Posted: 22 February 2012 11:16 PM #22

    This new tax is far from becomming law, but at a minimum this article should remind us that any tax on dividends is a tax on income already taxed twice before.  It is after-tax income that the investor uses to purchase his AAPL, then Apple pays tax on its income.  The dividend is then taxed.  And as we see here, that rate can be raised (or lowered).

    And as pointed out by another poster, the dividend taxes cannot be timed like capital gains taxes.  The income happens ever quarter whether you want it or not.

    Signature

    You will find hard currency at Midas Mulligan’s.

         
  • Avatar

    Posted: 22 February 2012 11:53 PM #23

    Hamourabi - 21 February 2012 01:13 PM

    Since AAPL is vastly undervalued, my take is that a share repurchase plan would be best for shareholders.

    I disagree that aapl is “vastly undervalued”. It’s value is determined every day the market is open.

    It’s fairly clear that Apple will soon announce a recurring dividend. That announcement will certainly help with the valuation “issue”.

      cheers to the longs
          JohnG

         
  • Posted: 23 February 2012 09:58 AM #24

    Trading the odds of a dividend:  Jason Schwarz

         
  • Posted: 23 February 2012 10:00 AM #25

    bweels - 22 February 2012 06:15 PM

    Regarding a split, I agree with the reasoning of those who argue for one, so no need to repeat anything. What’s interesting is that I never hear an argument that’s actually against a split. At most, I’ve heard that it’s not necessary, or that the psychological advantage only helps the clueless little guy who can’t make a difference anyway, so why do it. Well, why NOT do it? Can anyone talk about a meaningful downside to a split? I don’t mean that to sound like a challenge - I’m genuinely interested.

    Otherwise, it seems to me that with some empirical evidence that it may help, and no reason that it could actually hurt, that splitting the stock is at worst a “nothing to lose” situation.

    I few weeks ago I read an article that stated that a split would be negative because of the impact it would have for the High Frequency Trades.
    Apparently HTF algorithms work better with stocks that have more outstanding shares.
    I will try to find the article and post the link….

    Signature

    An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.

         
  • Avatar

    Posted: 23 February 2012 11:06 AM #26

    Burgess - 22 February 2012 07:10 PM
    bweels - 22 February 2012 06:15 PM

    Regarding a split, I agree with the reasoning of those who argue for one, so no need to repeat anything. What’s interesting is that I never hear an argument that’s actually against a split. At most, I’ve heard that it’s not necessary, or that the psychological advantage only helps the clueless little guy who can’t make a difference anyway, so why do it. Well, why NOT do it? Can anyone talk about a meaningful downside to a split? I don’t mean that to sound like a challenge - I’m genuinely interested.

    Otherwise, it seems to me that with some empirical evidence that it may help, and no reason that it could actually hurt, that splitting the stock is at worst a “nothing to lose” situation.

    I can’t quite remember, but I vaguely recall an argument about the difference that will occur in volatility from a split. Because a lower price per share will mean more change in percentage terms for each cent change in stock price…or something like that.

    2% up or 3% down, is the same for a $500 stock, or a $50 stock.

    Signature

    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition

         
  • Posted: 23 February 2012 11:22 AM #27

    TanToday - 23 February 2012 03:06 PM
    Burgess - 22 February 2012 07:10 PM
    bweels - 22 February 2012 06:15 PM

    Regarding a split, I agree with the reasoning of those who argue for one, so no need to repeat anything. What’s interesting is that I never hear an argument that’s actually against a split. At most, I’ve heard that it’s not necessary, or that the psychological advantage only helps the clueless little guy who can’t make a difference anyway, so why do it. Well, why NOT do it? Can anyone talk about a meaningful downside to a split? I don’t mean that to sound like a challenge - I’m genuinely interested.

    Otherwise, it seems to me that with some empirical evidence that it may help, and no reason that it could actually hurt, that splitting the stock is at worst a “nothing to lose” situation.

    I can’t quite remember, but I vaguely recall an argument about the difference that will occur in volatility from a split. Because a lower price per share will mean more change in percentage terms for each cent change in stock price…or something like that.

    2% up or 3% down, is the same for a $500 stock, or a $50 stock.

    except, price moves in points not %. so if minimal change on bid/ ask is 1 cent, that’s higher percentage on 50 vs 500$ stock. ( 10x higher)

    it would take the same amount of money to move it 0.01 but it would be higher volatility in % terms. I’m not sure if that has any significance to anything

         
  • Avatar

    Posted: 23 February 2012 11:40 AM #28

    Burgess - 22 February 2012 02:41 AM

    (...)

    1. Recurring dividend

    - brings in new investors/funds that only invest in income/dividend stocks.

    (...)

     

    How would that work out in reality?

    Let?s assume I am managing a mutual fund which only invests in stocks that pay out a dividend. When would the point be that I can buy AAPL without violating my charters?

    (1) Before the announcement, just on rumors, so that I can get a good price?

    (2) When the announcement is made?

    (3) When it actually starts paying out dividends?

    Just curious because I am not sure when exactly this new investor class would jump in and push the price of AAPL up?

    Have those mutual funds maybe already bought AAPL on the rumor, speculating that by the time they have to report to their investors Apple is indeed paying a dividend and thus meets their charters?

    Signature

    “Anyone who has never made a mistake has never tried anything new.” Albert Einstein

         
  • Posted: 23 February 2012 06:02 PM #29

    Did anyone notice Tim’s comments about possibly limiting dividends to preferred shareholders? I can’t say I’m very excited about that, nor do I agree with his hypothesis that the tax implication will scare off regular investors. Any have any more info or care to elaborate? I’m getting this from AppleInsider, so the usual grain of salt caveats.

         
  • Posted: 23 February 2012 06:07 PM #30

    limiting dividends to preferred shareholders?

     

    Now there’s a new one.