Dividends - 2 cents more worth
Quote:
Originally Posted by
digger
Dividends
There have been several comments posted recently about pampering to shareholders by giveing out a dividend.Also another about a div just because
....... (sic).......to say that we could unlock a lot of potential future inflow of sp appreciations by a regular income stream that formally went to the finance companies.
And my 2 cents worth:
I philosophically favour dividends.
There will be further explorations/perhaps acquisitions but they 'should' be paid for out of debt or capital raising (and don't forget there has been a recent share issue) as it isn't 'normal' for one part of a business to subsidise another out of company profit. Remember that one of the costs of development of new business is legitimately the cost of capital - part of that is the borrowing costs. Releasing retained earnings to shareholders keeps a company focussed on the profitability of the individual business units and forestalls a tendency towards cross subsidisation. In a way it forces a business to concentrate on units that are worthwhile rather that 'nice to do'.
I could also rattle on about investors perception and share price effects - but you've already covered that to good effect.