<<As to increasing debt, to me it's a separate issue, but perhaps some companies do leverage in order to increase dividend yield as you suggest.>>Just to clarify, I'm not suggesting that dividend yield is increased by shifting capitalisation to debt, I'm suggesting that a more leveraged capital structure throws off interest instead of divdidends...that interest isn't double taxed and 'investors' in that debt can have the income steam they want by mixing debt and equity in their holdings. Debt is a more efficient way to deliver income, IOW.
An interesting extension of this concept is Haugen's superstocks concept, where a mix of shares and debt is put together to produce a portfolio that, if viewed as a 'stock,' would have a lower PE, higher growth rate, higher dividend yield...an overall better value, with lower volatility than any single stock would offer. |
