It makes sense to buy a stock for a 37.5 cent dividend and lose $$$$ in stock price. The only buyers are the mutual funds, hedge funds, and employees. Everyone else stays clear. This stock and the market is a ticking time bomb. I would prefer to take a chance by buying corporate bonds than a stock that pays a dividend in this market. By the way, Bloomberg reports on how the market would have to increase six fold to reach Q4 earnings estimates. Most people watch the pump and dump of CNBC. They now announce a close to bottom instead of a bottom. Stocks are cheap you want to buy. They want you to buy so they can get out. Markets go up as they say on CBNC between Nov-Apr. Not on these earnings. Look at what intc announced and half the companies reporting earnings before this week. There is most likely restrictions on what can be said. Prices will go down before there are true buyers. I am looking at a few stocks to go long on but not at these prices. COF I will not buy into now, because I do not trust them. A financial stock that has not lost value in this market for 10 months. When companies with solid earnings are losing half their values.
Just as there are a lot of geniuses in bull markets, there are a lot of idiots in bear markets. And in both instances, not everyone is equally deserving of the title. Ideas that seem shareholder-friendly and prudent when stock charts are soaring seem shareholder-hostile and reckless when the charts are plunging down. One telling example of this: Companies that spent loads of money paying out dividends and buying back stock seem brilliant in good times and stupid in bad times.
In the recent bull market, there was a lot of pressure from investors and new incentives (favorable tax treatments for dividends) for companies to pay dividends to long-term shareholders, rather than hoard profits, or use them for acquisitions. And with the climate highly favorable to profits (low interest rates, rampant global growth), CEOs had plenty of cash piling up on their balance sheets. Dividends were a tax-efficient means of rewarding shareholders who stick around (not to mention executives with big stock holdings). Companies also eagerly repurchased shares during the bull market, for two reasons. First, repurchases would compensate for the dilution created when executives and employees exercised stock options. Second, by reducing the number of shares outstanding, repurchases would make profits look more impressive. Professional investors often value shares by looking at their price-to-earnings ratios—i.e., the amount of profits earned per each share outstanding. The lower the better. Reduce the number of shares, and suddenly the p/e ratio falls even if earnings are flat. (One dollar of earnings spread over 10 shares, is 10 cents per share. But $1 of earnings over nine shares is 11.1 cents per share—an 11 percent increase.)