Wednesday, March 18, 2009

Feeling Like the Dryer Ate My Socks AND My Stocks

[UPDATED: I originally posted the entire article from investopedia here, but after brushing up on my copyright rules and regs (thanks to a couple colleagues) I've removed the article and just linked to it. Oops. Better safe than sorry.]

Justin here. I ran across a great article on
(you can find the original here) that talks about where all our stock value "went".

The take-home is this: when so much of a company's stock price is determined by perception, there is real value and security in investing in companies that will pay you a dividend. People can argue all day long whether a stock is worth $5 or $50, but it is impossible to argue about the real value of the dividends that just landed in your account.

Once you start focusing on dividends, the main question becomes: "is this company (stock) able and inclined to pay a stable, meaningful, and growing dividend?"

We think that's a whole lot more productive and easier to determine than the non-dividend approach where the sole question is: "is this company going to be worth substantially more on the day I need to sell it?"

1 comment:

  1. Justin,

    You've hit on a key question when you ask whether a company can sustain its dividend payments. That's a much tougher question than it was one year ago.


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