mark
fire starter
Posts: 1,632
|
Post by mark on Feb 13, 2022 14:48:01 GMT -8
Yeah, Apple's divy is ridiculously low by any standard. It pays the lowest yield in all the Dow 30! I didn't even know this until I recently sorted the Dow by dividend yield when looking for put-selling candidates. It really is a good example of value vs growth stocks. This is ludicrously low for the most profitable company ever. If I sold all my Apple and bot IBM, I'd be getting paid a metric fuckload magnitude more just to hold the stock! Apple's meager dividend makes my dad feel like the poorest half-percenter ever. First world problems?
At some point you do run out of growth investors and need some value buyers...
Was only thinking on Friday that I might diversify into something with a better dividend yield. FMG.AX. 18.48% dividend yield. You could buy that on margin…. I'm guessing that FMG trades roughly proportional to the price of iron ore. On Jan 1, 2020, pre-covid related shortages, iron ore was 85.98/T. Today it is 145.50/T. The big question is - if you expect iron ore prices to keep rising, then perhaps this would be good to own for income purposes. However, if iron ore prices return to 2020 levels, the stock could also return to its former price ... which is less than what it is today. And presumably the dividend would go down as well.
|
|
|
Post by benoir on Feb 13, 2022 16:02:38 GMT -8
Was only thinking on Friday that I might diversify into something with a better dividend yield. FMG.AX. 18.48% dividend yield. You could buy that on margin…. I'm guessing that FMG trades roughly proportional to the price of iron ore. On Jan 1, 2020, pre-covid related shortages, iron ore was 85.98/T. Today it is 145.50/T. The big question is - if you expect iron ore prices to keep rising, then perhaps this would be good to own for income purposes. However, if iron ore prices return to 2020 levels, the stock could also return to its former price ... which is less than what it is today. And presumably the dividend would go down as well. Admittedly I have been so focused on AAPL for the last 20 years that I don't know that much about FMG. Have always held a handful of BHP but not enough to draw my attention. From what I understand Australian Iron Ore is has very low production cost. So it's somewhat insulated from fluctuations in iron ore price. The other factor for FMG could be any concerted push into hydrogen would see that pile of dividend cash become cap ex. I'm probably at that point where I would give work away if I had an income steam that didn't require me to down sell APPL - yet.
|
|
JDSoCal
Member
Aspiring oligarch
Posts: 4,241
|
Post by JDSoCal on Feb 13, 2022 20:00:57 GMT -8
Yeah, Apple's divy is ridiculously low by any standard. It pays the lowest yield in all the Dow 30! I didn't even know this until I recently sorted the Dow by dividend yield when looking for put-selling candidates. It really is a good example of value vs growth stocks. This is ludicrously low for the most profitable company ever. If I sold all my Apple and bot IBM, I'd be getting paid a metric fuckload magnitude more just to hold the stock! Apple's meager dividend makes my dad feel like the poorest half-percenter ever. First world problems?
At some point you do run out of growth investors and need some value buyers...
I don't particularly like dividends. I prefer to be able to choose myself when to take gains from an investment, and therefore when they will be taxed, rather than allowing the company to make that choice. Obviously I won't sell my Apple shares due to the dividend, and I wouldn't sell even if the dividend goes up significantly, and that's because I can't think of a better place for my investment dollars right now. With regard to switching the investment to something paying a higher dividend, only total return really matters in the long run. If you *really* need more current income from your Apple investment, just sell a few shares every now and then. You'd essentially be selling them back to Apple (because they buy back lots of shares every year), making the transaction equivalent to a dividend anyway. Why would I sell an appreciating asset with a huge tax basis for cash flow? It is also a false dichotomy that a growth stock can't pay a higher dividend when it makes more money than any company in history. You like your shares, but you'd prefer Apple underwrites and buys back zillionaire executives' stock grants instead of giving a longtime shareholder like yourself more shares for free via dividend reinvestment? Or just sits on $30B of shareholders' wealth? Again, not everyone is in your situation. Almost everyone on earth who wants apple for growth already owns it. If you want 4 or 5 trillion market cap, we need some value investors.
|
|
JDSoCal
Member
Aspiring oligarch
Posts: 4,241
|
Post by JDSoCal on Feb 14, 2022 8:25:12 GMT -8
Yeah, Apple's divy is ridiculously low by any standard. It pays the lowest yield in all the Dow 30! I didn't even know this until I recently sorted the Dow by dividend yield when looking for put-selling candidates. It really is a good example of value vs growth stocks. This is ludicrously low for the most profitable company ever. If I sold all my Apple and bot IBM, I'd be getting paid a metric fuckload magnitude more just to hold the stock! Apple's meager dividend makes my dad feel like the poorest half-percenter ever. First world problems?
At some point you do run out of growth investors and need some value buyers...
Was only thinking on Friday that I might diversify into something with a better dividend yield. FMG.AX. 18.48% dividend yield. You could buy that on margin…. I've had bad luck with miners, both precious metal and rare earth. FMG is at all-time highs. 😬 And looks like more of a 6% yield due to that appreciation?
|
|
mark
fire starter
Posts: 1,632
|
Post by mark on Feb 14, 2022 12:42:10 GMT -8
I don't particularly like dividends. I prefer to be able to choose myself when to take gains from an investment, and therefore when they will be taxed, rather than allowing the company to make that choice. Obviously I won't sell my Apple shares due to the dividend, and I wouldn't sell even if the dividend goes up significantly, and that's because I can't think of a better place for my investment dollars right now. With regard to switching the investment to something paying a higher dividend, only total return really matters in the long run. If you *really* need more current income from your Apple investment, just sell a few shares every now and then. You'd essentially be selling them back to Apple (because they buy back lots of shares every year), making the transaction equivalent to a dividend anyway. Why would I sell an appreciating asset with a huge tax basis for cash flow? It is also a false dichotomy that a growth stock can't pay a higher dividend when it makes more money than any company in history. You like your shares, but you'd prefer Apple underwrites and buys back zillionaire executives' stock grants instead of giving a longtime shareholder like yourself more shares for free via dividend reinvestment? Or just sits on $30B of shareholders' wealth? Again, not everyone is in your situation. Almost everyone on earth who wants apple for growth already owns it. If you want 4 or 5 trillion market cap, we need some value investors. Let's say a company has 1000 shares, $1M each, and you own 10 of them. That means that you own 1.00% of the company, worth $10M. That company has $50M in the bank, and can choose to distribute the $50M as a $50k/share dividend, or to buy back $50M of shares (50 of them). Case 1 - Company pays out the $50M in dividends, you get $500k of it, and you immediately pay taxes on the entire $500k at 23.8% or so. The stock price is now $950k (as adjusted by the $50k dividend). You still own 1% of the company. Case 2 - Company buys back $50M of stock, or 50 shares. You now own 1.053% of the company. Now if you happen to need money at the time, you can sell some shares (let's say 0.053% of the company, worth about $500k), AND you can choose which shares to sell, presumably those with a basis higher than zero as is usually done, and therefore even though you realize about $500k on the sale, you do not pay taxes on the full $500k, instead you pay taxes on the $500k minus the basis. And, you don't have to sell all $500k of shares right now, maybe you can choose to sell some now, and some later, or maybe not all of them at all. And if you are reinvesting dividends anyway, in case 1, you can reinvest about $380k ($500k minus the taxes due) into new shares, and in case 2, you effectively reinvest $500k into shares! It is the facts illustrated in the above example that make dividends less attractive to almost everyone than long-term capital gains are. There are also other cases in which "excessive" dividends can really mess up tax planning. There are people, usually retired, who try to keep (via balancing capital gains and losses as necessary) their income in the lower brackets, and use the excess of their last bracket to realize some long-term capital gains each year while still at a zero percent tax rate. If a company they own suddenly decides to up the dividend, or horrors distribute a "special" dividend, that could totally destroy their entire tax planning for that year, and perhaps for years to come. As far as buying back employee stock grants. If this company above distributed 50 shares as stock grants, would you prefer instead that the company has 1050 shares outstanding? And then you would only own 0.95% of the company thereafter.
|
|
|
Post by benoir on Feb 14, 2022 16:56:59 GMT -8
Was only thinking on Friday that I might diversify into something with a better dividend yield. FMG.AX. 18.48% dividend yield. You could buy that on margin…. I've had bad luck with miners, both precious metal and rare earth. FMG is at all-time highs. 😬 And looks like more of a 6% yield due to that appreciation? thanks for the link gotta say, I don't quite follow how they get to 6% yield Agree with you on precious metal and rare earth - which are probably speculative and volatile, but FMG is basically just plain vanilla iron ore. from - au.finance.yahoo.com/quote/FMG.AX?.tsrc=applewfDividends & splitsForward annual dividend rate 4.22 Forward annual dividend yield 18.55% Trailing annual dividend rate 2.68 Trailing annual dividend yield 11.80% 5-year average dividend yield 8.28 Payout ratio 56.06% EPS TTM $4.68 Assuming a forward ESP of $4.68 and same payout ratio would give a forward annual dividend rate of $2.60. At today's share price @ $22.4 = 11.7% yield. I might(more than likely) be missing something but with no growth the yield looks good. www.abc.net.au/news/rural/2022-02-14/pilbara-mining-boom-conditions-return-for-2022/100824564
|
|