Dividends (Again)

I still get flack from clients, potential clients, and even other advisors for my post about the irrelevance of dividends.

If a company has one $100 million in the bank, and then pays it out to its shareholders, that company no longer has $100 million. It is now worth $100 million less than it was before it paid that dividend.

There are many companies that could go a year without paying dividends, and instead use those funds to improve their technology, their staff, or their brand. I could name a few. I’m sure you could too.

The fascination that dividends make companies great investments is ludicrous. Dividends are irrelevant.