/biz/ - Business & Finance

>>56466432
>You bash dividends, but have not provided any alternatives
There are three alternatives:
>companies reinvesting to grow the business, build out new segments, purchase competitors, pursue research, etc.
In this case, your ownership of the company changes because the company is no longer the same company it was the day before. As the company expands, you can sell some shares and maintain similar financial interest. All else equal, a company reinvesting entirely towards growth will be able to spend more on growth than an equivalent "dividend-growth" stock, which necessarily is deploying some capital towards dividend payments. However as an individual you can sell some shares to participate in part of the growth while also generating some personal returns for other spending or reallocation.
>companies buying back shares.
Fundamentally this is equivalent to paying dividends for reasons I've previously explained. I highly recommend you engage with some of the sources I've provided.
>companies sitting on cash
This is typically indicative of poor capital management, but sometimes is priced into the valuation. You can actually scale up your own holding size, possibly on leverage, to effectively negate the cash balance and maintain the beta exposure you desire.
Interestingly you're noting AAPL as an example of this, yet the large gains for apple occurred when they stopped sitting on the cash due to changes in tax policy under the Trump administration, and started aggressively buying back their shares from a relatively low forward-valuation.

If you need a real world example of non-divvy capital returns, I present you with this direct example of a company heavily buying back shares: AZO.

>>56404023
>This isn’t based in reality. As we’ve gone over before buybacks can be abused by management for their own gain at the detriment of the stockholder
Not a valid answer. Sorry buddy.

What I'm posting is factual insight based on actual hard math. These are proven concepts. What you're arguing is your own personal fantasy.
And I'm sorry you're too fucking lazy to sell some of your own shares when you want cashflow or think a company has become overvalued, but the annual tax drag of dividend receipts is the price you pay for ignorance I guess. Meanwhile I sit comfy with stocks like AZO that have effectively tripled my ownership stake in the company over the past decade, entirely tax free.

>>54934701
AZO is a buy and hold

>>54686622
Some companies return capital by consistently reducing share count.
This is objectively superior to paying dividends, with two exceptions: Swing traders holding stocks for just 61 days unlock qualified dividend rate in a shorter timeframe than typical longterm gains 1 year period. There is also a 1% buyback tax recently implemented for US companies.

If you sell some percentage of your shares regularly on a position that you've held for 1+ year, there is zero difference vs receiving a similarly sized dividend. A dividend is paid out of company cash and your residual stake in the company is smaller - because they have less cash. There is no fundamental benefit to receiving a dividend. This is objective math, not opinion.

Companies that pay excessive dividends tend to eventually go bankrupt. In a similar sense, shareholders that select to sell down a stake rapidly will eventually hold no shares.
Shareholders that participate in DRIP are choosing roll up a position that may eventually becomes worthless if/when the company someday dies out. Shareholders who invest in companies which regularly buyback or reinvest their capital through development/acquisitions may someday find the company also fails.
Balance is key.

In the end, it is up to the individual to choose positions that will give them excess returns beyond what they're paying today to buy those shares. Whether or not a company pays a dividend is statistically an irrelevant factor in this. A dividend on it's own has no signaling power.

>>53785240
Dividend investors usually shut up the moment you show them autozone.
Most buyback programs are stupidly structured to bail out management at the top though, to be fair. This was visible in many tech names during 2020-2021.

>>53352894
Excellent detective work. I recommend everyone acquire some shares before they run out.

>>53319567
You're probably looking at tech tranny shit. Check out AZO.

>>53223662
>If I set a goal to make 10% realized gains in a year and I have stock that has a history of providing 10%, that factors into my thinking.
My point is that it's really consistency of earnings driving that. But since you want an example here's the one I typically give. AZO buys back persistently around 5-10% of shares each year. Earnings metrics compound as remaining outstanding shares continue to decline, along with some organic growth in sales/store and number of stores opened.
Dividend investors will miss out on this clear outperformer.

When I say dividends don't matter. I don't mean you have to run off and chase the newest SPAC before it declines 90%. There's a wide world of stocks out there, with varying capital return and allocation strategies.