MM>>(i agree that strategic buybacks, when a stock is "cheap", should remain an option. but most companies today do not have this problem at all. which is to say, they are basically overpaying in their buybacks.)<<
I guess it depends on what you consider to be "cheap." Among recent buybacks, Goodrich Aerospace initiated a buyback policy AFTER the shares had dropped from the 40s to the 20s and below last September. The buyback was also tied to the purchase of stock for an employee stock option plan. This is a typical example of the use of stock buybacks, which rarely if ever occur after the stock has already appreciated. The one exception that I have seen to this policy is called "greenmail," where a company deliberately buys back shares owned by an investor bent on taking over the company. There are laws against greenmail these days.
Some companies pride themselves on a policy of consistently increasing dividends year after year. Washington Real Estate Investment Trust, for example, has increased its dividend every year for the past 31 years. People who buy this REIT often do so with the intent of placing the shares in a Roth IRA or some other type of retirement account with deferred or no taxes. In this sense, the dividend policy of a company will determine to a certain extent HOW or WHETHER an investor intends to make use of the investment.
I would reiterate, however, that, at a time when wireless is a rapidly growing and changing field, any dividend, even if it is in the form of return of capital, seems out of place.
Art Bechhoefer |
