Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 137.34

+0.8%

Feb 6 9:30 AM EST

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To: Wyätt Gwyön who wrote (110138)	1/2/2002 7:28:02 PM
From: carranza2	Read Replies (1) of 152472

I meant that if co. XYZ has a cash stash of $1bn which is available for payment of dividends but does not pay them, then the share price of XYZ should be the same as that of a comparably cash-equipped dividend-declaring company. Assuming this is true, and it should be from a strictly arithmetical standpoint, it should not make any difference whether dividends are paid. But the assumption may actually not be true. A company hoarding its cash increases its options and flexibility, making it a more formidable competitor, thereby increasing its share price. Such a company can fund more R&D, engage in more ventures, etc. That is the fallacy in looking at dividend payments as a gauge of a corporation's financial health or prospects. I'll take my dividend in a higher stock price, especially if the tax consequences are that I pay capital gains instead of income taxes. A good reason to be like Buffett and not rely too much on the rear-view mirror when investing.

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