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Dividends are basically saying "we're returning earnings because you can probably invest them better than we can". It's up to the investor balance their portfo
by akronim 15y ago
Dividends are basically saying "we're returning earnings because you can probably invest them better than we can". It's up to the investor balance their portfolio and decide how much money they have invested in the company, dividends are supposed to be that mechanism.
- wonnage 15y agoSure, and as a shareholder I can say that I always know better. In reality I probably don't, but it's a matter of principle. We own this company, and they're telling us that they'd rather use all the profits they generated (out of the money we provided) for themselves. It's not that I think every company should always pay out a dividend. It doesn't make sense if you're growing fast, or losing money. Berkshire doesn't have to because we generally agree that Buffett's a better investor than the rest of us. For the vast majority of companies not in these categories though, it seems like the shareholders would be better off if they just got the cash.
- adw 15y agoNo, not for themselves; for their shareholders – ie for you. They're saying that there's an illiquid opportunity they can access which you can't. You might disagree with them; if you do, sell the stock.