Long Term Dividend Growth

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    Posted: 27 February 2012 10:55 AM #46

    Buffet has been a boffo buffoon in the past few years.

    He has actually been a DOG INVESTMENT for a very very VERY long time.

    The man made his money in the BUY AMERICAN AND HOLD days, and since that world passed away, he has not made a dime. Nowadays, if it isn’t CRONY CAPITALISM, or GOVERNMENT PROTECTED GRABS, he doesn’t do all that much.

    Look at the following chart:

    Now, if you can call 8% gain over FIVE YEARS, worthy of emulation, have at it. But for ME, that old dog Buffet can play his Banjo and play the affable old grandfather gig for others.

    I wouldn’t touch that old BAG OF FINANCIAL AND MANUFACTURING dogs with YOUR money…..

    .... let alone mine.

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

         
  • Posted: 03 March 2012 10:27 PM #47

    redge - 04 March 2012 02:26 AM

    An observation if Apple starts paying a dividend and the stock goes up. One’s annual dividend, as a percentage of the amount invested, depends on what one paid for the stock.

    To take BP as an example, it s currently paying about 4% on its current price. Where I bought, it is over 5%. Within a couple of years, I think that, on my investment, it is going to pay me about 7%. Plus the capital appreciation.

    This is not an analysis that I have seen, on ths forum, about Apple. There is almost no, if any, discussion about the practical consequences of Apple declaring a dividend programme. But the fact is, for people who get in at a price that is a good deal lower than the day to day stock price, it could mean significant annual returns.

    Just a thought.

    Yield on cost is what would matter to me.

    For many it would be higher than yield on current share price.

         
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    Posted: 03 March 2012 11:05 PM #48

    roni - 04 March 2012 02:27 AM
    redge - 04 March 2012 02:26 AM

    An observation if Apple starts paying a dividend and the stock goes up. One’s annual dividend, as a percentage of the amount invested, depends on what one paid for the stock.

    To take BP as an example, it s currently paying about 4% on its current price. Where I bought, it is over 5%. Within a couple of years, I think that, on my investment, it is going to pay me about 7%. Plus the capital appreciation.

    This is not an analysis that I have seen, on ths forum, about Apple. There is almost no, if any, discussion about the practical consequences of Apple declaring a dividend programme. But the fact is, for people who get in at a price that is a good deal lower than the day to day stock price, it could mean significant annual returns.

    Just a thought.

    Yield on cost is what would matter to me.

    For many it would be higher than yield on current share price.

    You can look at it that way as a feel good, but dividend yield uses current share price as the denominator.  You need to view it this way for comparing yields with alternative investments.  Don’t kid yourself, you may only have, say $100 per share invested, but it is worth all of today’s share price and them some and the current share price is what you currently have invested.

         
  • Posted: 03 March 2012 11:11 PM #49

    madmaxroi - 04 March 2012 03:05 AM
    roni - 04 March 2012 02:27 AM

    Yield on cost is what would matter to me.

    For many it would be higher than yield on current share price.

    You can look at it that way as a feel good, but dividend yield uses current share price as the denominator.  You need to view it this way for comparing yields with alternative investments.  Don’t kid yourself, you may only have, say $100 per share invested, but it is worth all of today’s share price and them some and the current share price is what you currently have invested.

    You just made my head hurt. smile

    If I paid $100 a share and the annual dividend yield is $10 a share, what is the yield on my cost?

    If the current share price is $200, and the annual dividend yield is $10, what is the current dividend yield.

    It is really very simple.

         
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    Posted: 04 March 2012 01:17 AM #50

    roni - 04 March 2012 03:11 AM

    If I paid $100 a share and the annual dividend yield is $10 a share, what is the yield on my cost?

    If the current share price is $200, and the annual dividend yield is $10, what is the current dividend yield.

    It is really very simple.

    Yes, it is very simple and the formula works in both of your examples.  However, IMHO, the latter of the two is the more proper way to view this.

         
  • Posted: 04 March 2012 01:25 AM #51

    madmaxroi - 04 March 2012 05:17 AM
    roni - 04 March 2012 03:11 AM

    If I paid $100 a share and the annual dividend yield is $10 a share, what is the yield on my cost?

    If the current share price is $200, and the annual dividend yield is $10, what is the current dividend yield.

    It is really very simple.

    Yes, it is very simple and the formula works in both of your examples.  However, IMHO, the latter of the two is the more proper way to view this.

    More proper?

    It depends.  If I wanted to know my yield on my cost, I know which one to use.

    If I want to know the yield based on the current share price, I know which one to use.

    I don’t think propriety enters into it smile

         
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    Posted: 04 March 2012 01:38 AM #52

    roni - 04 March 2012 05:25 AM
    madmaxroi - 04 March 2012 05:17 AM
    roni - 04 March 2012 03:11 AM

    If I paid $100 a share and the annual dividend yield is $10 a share, what is the yield on my cost?

    If the current share price is $200, and the annual dividend yield is $10, what is the current dividend yield.

    It is really very simple.

    Yes, it is very simple and the formula works in both of your examples.  However, IMHO, the latter of the two is the more proper way to view this.

    More proper?

    It depends.  If I wanted to know my yield on my cost, I know which one to use.

    If I want to know the yield based on the current share price, I know which one to use.

    I don’t think propriety enters into it smile

    Ok, let’s say you put $1,000 into a passbook savings account 30 years ago that is now worth $2,500.  To base 2012 yield on the initial $1,000 is useless information.

    If that doesn’t grab ya, I guess we agree to disagree.  smile

         
  • Posted: 04 March 2012 11:31 AM #53

    This is my first post here and I am not a native English speaker so my apologies for butchering grammar and spelling .  Here are some weekend musings

    Dividend yield
    Let ?s assume for a second that Tim Cook was lying and that he and the board feel that they do need all the money in the bank , that they like the 100 billion dollar cushion . However let?s also assume that they figure that that is enough , nothing more is needed to feel comfortable and they are willing to part with anything more then 100 billion in the bank .
    Some people on this board suggest that Apple will make 50 dollars per share next year .  I they were to pay a 50 dollar per share dividend on a 500 dollar stocks that is 10 % . On dividend yield alone Apple should double in price .

    Buyback
    I understand that Apple has a significant portion of their cash ? trapped ? overseas. Since Apple also trades overseas ( it is listed on the Frankfurt stock exchange ) why can that overseas money not be used , to buy back the stock overseas.
    If that is the case , why can Apple not repeat this and list itself on Euronext, Hong Kong ,LSE etc ...

    Short term strategy

    I have built a very nice position in Apple since 2008 ( Yippee ) , I do not daytrade ,I don?t even have an options account. Given the huge runup in the last 3 months and the historical pattern of selling of on the news ( presentation ) . I am tempted to go in cash tomorrow , lock in my gains ( at 15 % long term capital gains, before the Bush tax cuts expire ) and re enter in a few weeks or months after the pullback ..
    I am bullish long term and think Apple will be 1000 dollars 2 years from now , but hate to see the recent gains evaporate .... If TC announces ? one more thing , or immediate availability of Ipad 3 , I can always buy back during the presentation…

         
  • Posted: 04 March 2012 11:34 AM #54

    Just want to touch upon a point that was not brought up in this recent thread when discussing dividends: Albeit a fund manager or individual receiving a dividend with their stock having a lower cost basis is a terrific looking yield and furthermore, will cause someone to hold even longer versus selling any time soon, I do believe that one of the most important parts of AAPL paying a dividend will be the new large institutional buyers who will now be able to buy it “because” it pays one. 
    In the end a dividend would be good for many reasons…even for those who gain exposure through options since a rising stock lifts us all.
    My two cent.

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  • Posted: 04 March 2012 12:09 PM #55

    valere - 04 March 2012 03:31 PM

    This is my first post here and I am not a native English speaker so my apologies for butchering grammar and spelling .  Here are some weekend musings

    Dividend yield
    Let ?s assume for a second that Tim Cook was lying and that he and the board feel that they do need all the money in the bank , that they like the 100 billion dollar cushion . However let?s also assume that they figure that that is enough , nothing more is needed to feel comfortable and they are willing to part with anything more then 100 billion in the bank .
    Some people on this board suggest that Apple will make 50 dollars per share next year .  I they were to pay a 50 dollar per share dividend on a 500 dollar stocks that is 10 % . On dividend yield alone Apple should double in price .

    Buyback
    I understand that Apple has a significant portion of their cash ? trapped ? overseas. Since Apple also trades overseas ( it is listed on the Frankfurt stock exchange ) why can that overseas money not be used , to buy back the stock overseas.
    If that is the case , why can Apple not repeat this and list itself on Euronext, Hong Kong ,LSE etc ...

    Short term strategy

    I have built a very nice position in Apple since 2008 ( Yippee ) , I do not daytrade ,I don?t even have an options account. Given the huge runup in the last 3 months and the historical pattern of selling of on the news ( presentation ) . I am tempted to go in cash tomorrow , lock in my gains ( at 15 % long term capital gains, before the Bush tax cuts expire ) and re enter in a few weeks or months after the pullback ..
    I am bullish long term and think Apple will be 1000 dollars 2 years from now , but hate to see the recent gains evaporate .... If TC announces ? one more thing , or immediate availability of Ipad 3 , I can always buy back during the presentation…


    I have been thinking about the same issues.  My preliminary conclusions are:

    1.  Cash dividends.  A portion of the cash are possibly trapped cash overseas.  These happens when your annual cash increment is larger than your net profit after tax.  For example, if your sales is $100 and net profit is $50, your cash might actually increase by $65 because net profit is after deducting non-cash items such as depreciation.  So, in countries in Asia, where Apple is highly profitable (a reasonable assumption), cash increment every year might be higher than net profit.  Even if they are willing to pay repatriation taxes to US tax authority, the local China regulation do not allow them to remit dividend higher than their net accumulated profit. Such remittance rules is quite common in many tax jurisdictions worldwide, including US for foreign companies.  How much are trapped cash?  I am not sure but is a real problem facing high margin successful businesses operating internationally. 

    2. Share buyback in overseas jurisdiction.  This is not a straight forward matter. I think share buy back will only be beneficial if the shares can be cancelled and therefore reduce the number of shares outstanding is in turn increases the eps for us (the remaining shareholders).  If Apple starts buying shares using the overseas subsidiaries, it creates a huge mess of inter-company transactions, some of which re also not allowed by certain overseas jurisdiction. Also, as these shares are purchased by foreign subsidiaries, they are not returned to US to be cancelled.  If Apple declare and distributors dividends in future, these will be taxed by the foreign countries on the subsidiaries as dividend income etc.  See how much a mess it can create?  This is certainly a nightmare and I hope not a realistic course of action.  Listing overseas is unlikely to solve the issues either.

    I am not suggesting that there is insufficient cash for dividend or share buyback but an international company like Apple with complex tax issues will have many hurdles to cross. 

    Just to add some rational and a reality check on the possible reason why not all the cash can be used. 

    Personally, I think certainly hope a significant portion (especially those earned in the US can be utilized more efficiently.

         
  • Posted: 04 March 2012 02:21 PM #56

    As a relatively young person my investing past has not focused on dividends, so I don’t really follow their effects on a stock’s pricing behavior.

    I’ve seen some articles on special dividends, most recently this one at Seeking Alpha, that don’t explain the intent in a way that makes sense to me.

    My initial perception of a special dividend is that people will pile in, collect the dividend, and pile out.  I’d prefer Apple kept the cash then allow this to happen.

    Can anyone explain why I (who accumulated most of my aapl common at $60) would want a special dividend issued instead of no dividend or an ongoing regular dividend?

    Am I missing something obvious?

         
  • Posted: 04 March 2012 02:32 PM #57

    congrats on getting in at such a low price. On the surface a special dividend seems like a great idea. However I think people would probably pile in for the dividend then sell after they get the dividend. Ive even read that the stock will go down the price of the dividend.

    Say the price is 550, the dividend is 20 bucks then the price would go down to 530. Now apple has less money and the stock is the same as it was before the dividend.

         
  • Posted: 19 March 2012 08:44 AM #58

    I know that this has been discussed before, but what was the conclusion?

    For an annual dividend and/or a one time special dividend?

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  • Posted: 19 March 2012 09:29 AM #59

    Basically, option prices adjust as the underlying share price changes.  If an ongoing dividend ups the share price the value of call options will also rise.  The option does not, of course, enable the owner of any call to share in a dividend unless and untill an option is exercised.

    A one time dividend might be a little different, if the exercise date is past the date the one time dividend is to be paid.  Normally a share’s price drops immediately after a dividend is paid close to the amount of the dividend which was paid.  In the event of a large special dividend, I would expect the value of the option would lag the increase in the price of the underlying shares since the option holder will never be able to share in the payout, even if the option were exercised.

         
  • Posted: 19 March 2012 09:32 AM #60

    Dividend AND share buyback

    2.65 a share and 10 billion buyback,

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