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No! OP is talking about shareholder dilution, not balance sheet shareholders' equity. Also, dividends reduce shareholder equity so even by your perverse definit
by tacos 12y ago
No! OP is talking about shareholder dilution, not balance sheet shareholders' equity. Also, dividends reduce shareholder equity so even by your perverse definition they're certainly not "neutral."
- pedrocr 12y agoDividends reduce shareholder equity and give shareholders the same amount of cash so they are indeed neutral if you ignore taxes. The same is true for the market value of a company. If a company has a market cap of Y and pays out X in cash the market cap will tend to reduce by roughly X in any normally functioning market.