Quote:
Originally Posted by ErikLS2
I was thinking the same thing Greg but then heard an interesting opinion on the radio today. It was a CNBC talking head (I think it was Kevin O'Leary) and his point was that all that cash for the buyback would far benefit the shareholders more if it was paid out in dividends. It kind of made sense in that a buyback lowers the number of outstanding shares thereby HOPEFULLY increasing the value of each one while a dividend is getting actual cash in the mail. He said he would rather get a check than simply a chance that his shares might become worth more. He also said that a buy back benefits the insiders of the company more than a dividend increase and somehow helps them in the options market too (that one is over my head). It is a good point if you think about it but what are your thoughts on it Greg?
|
These are always debated points for the use of company cash. Whether or not it's better to expand the business rather that buy back shares.... or pay out a special dividend... or to try to create value in some other way. I don't know that any of us will ever know which one is "the best way". I don't own Nike (NKE) because of the small dividend... So perhaps if they'd raise the dividend to a point (what number? 3 or 4%) that it would make the shares more attractive to people like me... Would that create demand for the shares thus raising the price? As a dividend seeker --- yeah --- that would be my choice.
BUT --- always the big but..... if you look at TOTAL RETURN as a guide, over a long period of time. Then it's different. Because Nike has a terrific TR - and that is the truest test of making money on your money.
1 year TR -- 37% -- 3 year 188% -- 5 year 230%
So yes --- a lousy 1% divided -- but I wish I'd have bought a couple hundred thousand worth!!! LOL