Tag: dividends

Excess cash on the balance sheet is wealth destruction

Excess cash on the balance sheet is wealth destruction

Many of the largest technology companies are making so much money that they are rapidly accumulating cash on their balance sheets. While on could argue that this cash should be stripped off the balance sheet for valuation purposes, I would argue that the cash is worth less than face value because having excess cash on the balance sheet is an invitation to wealth-destroying acquisitions. The excess cash should be returned to shareholders as quickly as possible in the form of dividends or share buybacks to prevent such an outcome.

In Search of the Holy Grail of Investing

In Search of the Holy Grail of Investing

By Niels Jensen The Absolute Return Letter, December 2012 “It’s one thing to have an opinion on the macro, but something very different to act as if it’s correct.” -Howard Marks, Oaktree Capital Management It can be a frustrating, and rather futile, experience to be an economist. Financial markets do not always behave as if there is a connection between […]

Is Apple worth it?

Is Apple worth it?

There has been a lot of chatter about Apple recently because of the monster move it has sustained in the first four months of the year. Bloomberg reports that Apple gained more than $250 billion in market share in just four months to April 9. That’s more than IBM’s current value. Other impressive figures are being bandied about like: Apple is worth more than the entire retail sector combined, Apple is worth more than Microsoft, Google, Nokia, and RIMM combined, etc. But soon, growth will be all about the emerging economies.

When will large cap tech stocks start paying dividends?

When will large cap tech stocks start paying dividends?

I would argue that this is evidence that these companies are wasting shareholder capital by plunking down for splashy acquisitions and large new capital investments that are not paying off. Cisco and Microsoft have huge cash balances waiting to be deployed. This money can go to buying back shares at inflated prices or making acquisitions of dubious value to shareholders. The right thing for these companies to do is not necessarily just restructure but change their mindset and accept that the glory days of top line growth are over. First and foremost this means increasing the dividend payout to match other sectors of the economy.

Pimco: Seeking Alpha in Equity Returns in Europe

Pimco: Seeking Alpha in Equity Returns in Europe

The bond guys PIMCO have decided to move into equities. They are doing so cautiously.  I mentioned some comments they made by Gross regarding safe, high dividend stocks like utilities. At the time, he was suggesting almost all asset classes appeared to be overvalued on a long-term basis, which may explain his move into higher dividend, higher quality stocks first. […]

Some banks not paying TARP dividends

A friend sent me the following article from USA Today: The U.S. taxpayers’ investments in smaller banks are increasingly at risk. In a sign that more banks are under great pressure from the recession, 34 financial institutions did not pay their quarterly dividends in August to the Treasury on funds obtained under the Troubled Asset Relief Fund (TARP). The number […]

JPMorgan cuts its dividend fom 38 to 5 cents

From MarketWatch: J.P. Morgan Chase said late Monday that its board cut the company’s quarterly dividend to 5 cents from 38 cents, effective for the dividend payable April 30. “The board anticipates maintaining this level for the time being. This action will enable the company to retain an additional $5 billion in common equity per year,” the financial firm said […]