Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Mike M2 who wrote (66988)	8/30/1999 1:05:00 PM
From: re3	Respond to of 132070

yes people forget dividends can and have been cut...they look at prices as pretty stable...thinking that stocks could only go down so much...they are only prices...perhaps msft could trade at 20 for example...it would still have a high pe and long term holders would still have had a good return... but will the market really go to 4k on the dow...even i have trouble believing it, but one can dare to dream... if anyone has interest in the high tech area, i;d like a comment on corel corp ike

To: Mike M2 who wrote (66988)	8/30/1999 1:13:00 PM
From: Freedom Fighter	Respond to of 132070

Mike, I hate to defend the bulls even a little but I think that a small part of the declining dividend yield is related to share repurchases using free cash. I realize that a lot of repurchases are just related to exercised options and are debt financed, but there are some companies that have wisely chosen to buy back shares instead of paying dividends when opportunities arise. It's more tax efficient for shareholders than an after tax dividend reinvestment. I agree with you except in magnitude. Maybe 50%-60%? Wayne

To: Mike M2 who wrote (66988)	8/30/1999 11:54:00 PM
From: Richard Nehrboss	Read Replies (4) \| Respond to of 132070

Mike, RE: if this market were to return to the average dividend yield of the last 70 years the market would decline 70% I don't think you can take the dividend yield in isolation. Two factors go into the price of a stock: 1) discounted future earnings, and 2) the discounted terminal value of your investment. Companies today often bypass dividends that are heavily taxed in exchange for activities such as share buybacks, and reinvested earnings. These increase share value and therefore the terminal value of an investment in that company. I would therefore say that a dropping yield on the S&P paints only half the picture. Richard