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.Read more ›
Post Tagged with: "dividends"
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 […]Read more ›
Michael Mauboussin talks to Consuelo Mack about why its getting harder to beat the market and why doing less can actually make you more.Read more ›
I spoke to Tadas Viskanta of Abnormal Returns on StockTwits TV about a lot of different issues this past week. We discussed commodities, bond market, QE, tech stocks, and a lot more. Here’s the video below.Read more ›
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.Read more ›
Today it was revealed that last week the Federal Reserve rejected Bank of America’s plan to increase its dividend from its token penny a share in the second half of 2011. Clearly, the Fed is sending a message that it does not believe the margin of safety is large enough to warrant such a payout at Bank of America. What […]Read more ›
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. […]Read more ›
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 […]Read more ›
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 […]Read more ›
Meredith Whitney, the well-known former Oppenheimer analyst had some interesting words to say on CNBC about the banking sector, nationalization, dividends and Citigroup. Take a look.Read more ›
Update 08 Mar 2009: Remember this:
Wells Fargo gave anxious investors a pleasant surprise Wednesday, reporting a profit drop that was milder than anticipated and lifting its quarterly dividend by 10 percent.
Wells Fargo’s second-quarter profit fell 22 percent as more customers at the nation’s fifth-largest bank failed to pay back their loans. But it raised its dividend to 34 cents from 31 cents – at a time when many other financial institutions are slashing theirs to preserve capital.
Very foolhardy now that Wells has been forced to cut its dividend to 5 cents even after receiving $25 billion from the federal government. So, I am re-posting this story as a reminder of what lies ahead.Read more ›