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Post by CdnPhoto on Jun 1, 2024 4:12:15 GMT -8
Great close to the week. Just a few more days until WWDC.
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Post by Luckychoices on Jun 2, 2024 9:05:21 GMT -8
Has anyone on AFB read The Dividends Don't Matter on Seeking Alpha? I'm curious as to what other's reaction is to the article. To my wife and I, AAPL dividends mean that we don't need to occasionally sell AAPL shares to supplement our retirement pensions and my Social Security...so, for us, dividends certainly *do* matter. The author and many of the commenters are absolutely convinced that "Total Return" is the only important consideration and "dividends don't matter". The author had this to say in his article: " And surprisingly, the dividends don't count in retirement either, in my view. In retirement, I believe your portfolio success will come down to total return and the risk level. That's it. In the accumulation stage, only one thing matters if you want to optimize - create the largest portfolio possible.". He also said this, " No one with a financial plan would live off of the dividends". And this is what one of the commenters posted: " Whether you take the cash dividend or sell the equivalent dollar amount of the company’s stock, at the end of the day, you will have the same amount invested in the stock. It’s just that with the dividend, you own more shares but at a lower price (by the amount of the dividend), while with the self-dividend, you own fewer shares but at a higher price (because no dividend was paid)." Another commenter stated: " The dividends did not generate AAPL's tremendous gains. they subtracted from what could have been more gains." Nobody, IMO, would for one minute think that dividends *helped* AAPL have "tremendous gains"...but neither do I think they suppressed them.
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Post by CdnPhoto on Jun 2, 2024 15:50:20 GMT -8
Interesting thing I just noticed. On the Stock app on my phone, it shows AAPL closing at $192.32 same with Yahoo. Earlier it showed the closing price of $192.25. CNBC shows the $192.25 price. My broker also shows the $192.25 price.
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Post by aaplcrazie on Jun 2, 2024 19:28:16 GMT -8
Hey Cdn Photo, I show the same thing Phone is 192.32 Fidelity is 192,25.
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Post by incorrigible on Jun 3, 2024 4:24:32 GMT -8
Replying to Lucky: I'm a regular follower and occasional poster over at the Dividend Growth Investors (DGI) group at SA. Dale Robert's article (which I didn't read and don't have to in order to understand his line of thinking) is a direct result of the past clashes he's had had with the DGI group. I personally have built my entire retirement plan on DGI investing and it has worked out better than I ever expected. My current investments generate enough in dividend income alone to more than fund the shortfall my wife and I will get from Social Security and my wife's pension. Using the dividends reaped from our portfolio will insure we never have to sell shares to fund out lifestyle. This allows us to be agnostic to the market price gyrations that regularly occur. We actually will receive 50% more income than we need which serves and a safety cushion against possible cuts and provides money for fun stuff and reinvestment back into the portfolio. That income is also growing at around 10% per year which provides a hedge against inflation. I'm certainly not against capital appreciation and total return, however, that main focus for me is insuring a sufficient "paycheck" from our investments which allows me to sleep well at night. Good DGI stocks that increase their payouts regularly are financially strong companies with good business models, great management, and durable brands that customers want. That leads to good total return by default. David Van Knapp (DVK) over at SA posted an article that is in direct opposition to Dale's posting. The title was something along the lines of "Dividends Do Matter ... to Me" which explain his line of thinking which is similar to my own. IMO, there is only so much cash a company needs to reinvest in itself and fund R&D effort and sensible acquisitions. The rest should go back to shareholders. My $0.02 anyway. Edit: Here is a link to the David Van Knapp rebuttal article mentioned above.
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4aapl
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Post by 4aapl on Jun 3, 2024 11:48:00 GMT -8
Another commenter stated: " The dividends did not generate AAPL's tremendous gains. they subtracted from what could have been more gains." Nobody, IMO, would for one minute think that dividends *helped* AAPL have "tremendous gains"...but neither do I think they suppressed them. There was a timeframe where it seemed the market wasn't valuing Apple's cash holdings at all. Subtracting out cash from the market cap before calculating the P/E, you were getting an extremely low value. With that mindset, one could say that dividends did help part of AAPL's gain. Plus it opened it up to investors and funds that only invest in companies that give dividends. There's no simple answer and there are always positives and negatives. Things should cancel out/balance out. But one side of investing is buying when undervalued and selling when overvalued, instead of just taking risks hoping that things will do well. There haven't been too many times in the last 3 decades that AAPL has seemed overvalued at the time, but part of that is also due to me raising my benchmark or expectations when the stock is in a bullish run. Like many here, the dividend pays some or all of the bills, and makes it so I don't have to sell at times where I feel the stock is undervalued.
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Post by Luckychoices on Jun 3, 2024 13:05:36 GMT -8
Another commenter stated: " The dividends did not generate AAPL's tremendous gains. they subtracted from what could have been more gains." Nobody, IMO, would for one minute think that dividends *helped* AAPL have "tremendous gains"...but neither do I think they suppressed them. There was a timeframe where it seemed the market wasn't valuing Apple's cash holdings at all. Subtracting out cash from the market cap before calculating the P/E, you were getting an extremely low value. With that mindset, one could say that dividends did help part of AAPL's gain.Plus it opened it up to investors and funds that only invest in companies that give dividends. There's no simple answer and there are always positives and negatives. Things should cancel out/balance out. But one side of investing is buying when undervalued and selling when overvalued, instead of just taking risks hoping that things will do well. There haven't been too many times in the last 3 decades that AAPL has seemed overvalued at the time, but part of that is also due to me raising my benchmark or expectations when the stock is in a bullish run. Like many here, the dividend pays some or all of the bills, and makes it so I don't have to sell at times where I feel the stock is undervalued. Well, that may be true in a small part...but it would be a very small part, IMO. I was primarily frustrated with the concept of "The Dividends Don't Matter" and the supporting comments. My wife and I started investing in AAPL a full 12 years before the company restarted their dividend program in 2012. Obviously, the lack of dividends didn't prevent us from investing in the company...but I would never say the dividends don't matter with regard to AAPL. Since 60% of our AAPL is in our IRA's, we've never had to pay taxes on the dividends...and since 100% of the AAPL dividends have been auto-reinvested for the last almost 12 years, they've added a *huge* number of AAPL shares to our IRA's. At least for us, in our investment, dividends have *definitely* mattered. The author and others kept using the term, "Total Return" as being the only thing that truly mattered with an investment...and that dividends don't matter. My feeling is that "Dividends" are sometimes a nice addition to that Total Return. "Total Return" = "Total Share Price Gain" + "Dividends"
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4aapl
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Post by 4aapl on Jun 3, 2024 13:45:12 GMT -8
The author and others kept using the term, "Total Return" as being the only thing that truly mattered with an investment...and that dividends don't matter. My feeling is that "Dividends" are sometimes a nice addition to that Total Return. "Total Return" = "Total Share Price Gain" + "Dividends" It seems like you (someone...in this case that author) have to make a lot of assumptions. On the company holding the cash, maybe you gloss over the whole "they are able to avoid the problems of a cash crunch", and just go to valuing it somewhat based on what the company can earn from it, so maybe 5x or 10x. But cash crunches happen, and Apple had that in 1997 when Steve came back an interim CEO and they had the cash injection from Microsoft. Maybe with buybacks or dividends you could call that being worth the current P/E multiple, since a buyback would lock that in and give more company value to the investor, and a dividend would give the investor cash that they could use to buy more shares. Call that 30x. But then maybe you get theoretical and think that the company should be able to do even better with using that money to buy other companies, or do more R&D. And that might be true a lot of the time, but there is also a point where artificially growing the company too quickly doesn't get the full value, because it dilutes the focus. So in one case that might be 100x, and in another it's possible to be 0x or even negative, basically just a waste of money. A problem here is when someone comes up with a theory that works in many cases, but then just blindly tries to apply it to all companies, and all cases. And the other thing is making the assumption that all things are fairly and equally valued at all times. As we know, that isn't always the case. And sometimes it feels that it isn't often the case.
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Post by Luckychoices on Jun 3, 2024 16:52:26 GMT -8
The author and others kept using the term, "Total Return" as being the only thing that truly mattered with an investment...and that dividends don't matter. My feeling is that "Dividends" are sometimes a nice addition to that Total Return. "Total Return" = "Total Share Price Gain" + "Dividends" It seems like you have to make a lot of assumptions. On the company holding the cash, maybe you gloss over the whole "they are able to avoid the problems of a cash crunch", and just go to valuing it somewhat based on what the company can earn from it, so maybe 5x or 10x. But cash crunches happen, and Apple had that in 1997 when Steve came back an interim CEO and they had the cash injection from Microsoft. Maybe with buybacks or dividends you could call that being worth the current P/E multiple, since a buyback would lock that in and give more company value to the investor, and a dividend would give the investor cash that they could use to buy more shares. Call that 30x. But then maybe you get theoretical and think that the company should be able to do even better with using that money to buy other companies, or do more R&D. And that might be true a lot of the time, but there is also a point where artificially growing the company too quickly doesn't get the full value, because it dilutes the focus. So in one case that might be 100x, and in another it's possible to be 0x or even negative, basically just a waste of money. A problem here is when someone comes up with a theory that works in many cases, but then just blindly tries to apply it to all companies, and all cases. And the other thing is making the assumption that all things are fairly and equally valued at all times. As we know, that isn't always the case. And sometimes it feels that it isn't often the case.I guess what irritated me is the author's insistence that he was correct in all cases...which means everyone else must be wrong. When I tried to suggest, as you did, that with some companies and some cases, a different theory may be true, he responded with the same premise: => " Thanks the dividends don't matter. Selling shares is the same event." My response was that selling share is *not* the same event...how can it be? If I have 20,000 shares of a company and they're valued at $100 a share, I have $2,000,000 worth of that stock. If the company pays $1.00/share in dividends every year, I'll get $20,000 in dividends. If the share price pulls back 20% the next year, my shares will then only be worth $1,600,000...but I'll *still* get $20,000 in dividends that year. If I *sell* shares to get $20,000, I'll *immediately* have 200 fewer shares. If the share price pulls back 20% the next year, my shares will only be worth $1,584,000 *and* I'll only get $19,800 in dividends instead of $20,000. How is that "the same event"? His response? => " I hold Apple as well and realize almost all of the value is in the share price, and we'll be selling shares " SMH. 😁
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4aapl
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Post by 4aapl on Jun 3, 2024 17:17:33 GMT -8
It seems like you have to make a lot of assumptions. On the company holding the cash, maybe you gloss over the whole "they are able to avoid the problems of a cash crunch", and just go to valuing it somewhat based on what the company can earn from it, so maybe 5x or 10x. But cash crunches happen, and Apple had that in 1997 when Steve came back an interim CEO and they had the cash injection from Microsoft. Maybe with buybacks or dividends you could call that being worth the current P/E multiple, since a buyback would lock that in and give more company value to the investor, and a dividend would give the investor cash that they could use to buy more shares. Call that 30x. But then maybe you get theoretical and think that the company should be able to do even better with using that money to buy other companies, or do more R&D. And that might be true a lot of the time, but there is also a point where artificially growing the company too quickly doesn't get the full value, because it dilutes the focus. So in one case that might be 100x, and in another it's possible to be 0x or even negative, basically just a waste of money. A problem here is when someone comes up with a theory that works in many cases, but then just blindly tries to apply it to all companies, and all cases. And the other thing is making the assumption that all things are fairly and equally valued at all times. As we know, that isn't always the case. And sometimes it feels that it isn't often the case.I guess what irritated me is the author's insistence that he was correct in all cases...which means everyone else must be wrong. When I tried to suggest, as you did, that with some companies and some cases, a different theory may be true, he responded with the same premise: => " Thanks the dividends don't matter. Selling shares is the same event." My response was that selling share is *not* the same event...how can it be? If I have 20,000 shares of a company and they're valued at $100 a share, I have $2,000,000 worth of that stock. If the company pays $1.00/share in dividends every year, I'll get $20,000 in dividends. If the share price pulls back 20% the next year, my shares will then only be worth $1,600,000...but I'll *still* get $20,000 in dividends that year. If I *sell* shares to get $20,000, I'll *immediately* have 200 fewer shares. If the share price pulls back 20% the next year, my shares will only be worth $1,584,000 *and* I'll only get $19,800 in dividends instead of $20,000. How is that "the same event"? His response? => " I hold Apple as well and realize almost all of the value is in the share price, and we'll be selling shares " SMH. 😁 There's times where something is exactly the same, and there are times where it is virtually or nearly the same. It's pretty close, in the instantaneous timeframe. But as I think you pointed out before, even very small differences like buybacks really add up when compounded over time. Just like investments in general. But one thing to remember is that people's opinions are shaped a lot by the experiences they have been through. I'm sure you know that, but I'm throwing it out there anyways. This is especially true with investments. One example that I have given before was with the CEO of Property Radar, a company that dealt with info about foreclosures. If I remember right, he had worked at NetScape and lost a lot or had one of those cases where he paid taxes on employee incentive stock options, but then lost the value before cashing out. Anyways, when asking about if the small company had 401k matching, he said he was really against stock investments, whereas real estate investments had worked out well for him. Likewise, dividends aren't always a given. I bought BP 3 or 6 months after the oil spill, after the stock had cratered and bounced a little, but then later went on to lose another third. It had a pretty nice dividend at that level, maybe 7%. Then they cut it. 0%? 0.5%? 1%? It doesn't really matter. Other companies do the same, even without a massive environmental disaster and costs to clean it up. What I'm getting at is that along with coming up with an idea that seems to work in many situations, he might also have had other investment related things that helped shape and solidify his feelings on the matter. It's probably best just to understand that it's close enough that he can feel that way, even if you don't really feel that it's valid. Let's see what next week brings. I trust that Apple has a good long term strategy and plan. But Microsoft just announcing a bunch of layoffs is a reminder that while we're not in the worst of times, we're not in the best of times yet either.
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