.............................."Yesterday, S&P made regular changes to its Dividend Aristocrats lists. I'll review those changes later in this article, but first, let's take a closer look at how a stock becomes a Dividend Aristocrat and why it's such a select group.
Stick with dividend royalty
The first thing to understand about Dividend Aristocrats is that membership in its broadest list has nothing at all to do with the most common way that ordinary investors judge dividend-paying stocks: their yield. It's easy to focus on high-yielding dividend stocks, but the problem with them is that even though their yields may be high right now, there's no guarantee that their payouts won't go away in the near future. Moreover, high yields often result from beaten-down shares, and despite the value opportunities that some of those stocks present, often, share-price declines turn out to be prescient in predicting dividend cuts.
By contrast, Dividend Aristocrats require a long track record of annual dividend increases. Historically, that threshold has been 25 years for all of the Dividend Aristocrats lists.".......................................
With the increase in capital gains, will some of these Aristocrats trim their payouts? I know our board is thinking about reducing dividends to decrease taxes on our investors.
Thomas Sowell: There are no solutions, just trade-offs.
FredHayek wrote: With the increase in capital gains, will some of these Aristocrats trim their payouts? I know our board is thinking about reducing dividends to decrease taxes on our investors.
What would they replace them with? Price appreciation through growth? That is a whole different subset of investors.
And that is the biq question for the board. For the first 20 years, we didn't pay dividends and got a certain class of investors. Do we want to go back to the original formula?
Thomas Sowell: There are no solutions, just trade-offs.
FredHayek wrote: And that is the biq question for the board. For the first 20 years, we didn't pay dividends and got a certain class of investors. Do we want to go back to the original formula?
Public co? Symbol?
At any rate IMO boards act in their own self interest rather than the shareholders just like politicians. Cynical, no just recognizing that the reason we celebrate Saints is that there are so damn few of them.
What will the board do? Depends on how many shares they hold.
Public Co, but most of the board are big shareholders. The CEO isn't. So he wants to keep the money for aquiring new companies, and now the other board members don't want to pay higher taxes so it looks like he wins with the current 20% capital gains.
Yes, raising tax rates does affect behavior.
Thomas Sowell: There are no solutions, just trade-offs.
