To: Trader X who wrote (18683 ) 1/26/2001 5:02:59 PM From: Zeev Hed Respond to It is not that simple, first you have to look at those companies that do pay dividends, you will find that their market cap is probably equal to 80% of the total market cap. Then you have to see what companies really do with the money they do not pay out, ys some of the companies reinvest that money in the business, but a good number of the larger companies (MSFT, INTC and even MRK) pour billions each year to buy back their shares, at premiums of 5 to 10 times book value. Sure there is a tax reason for that (when a company buys back shares they actually are paying dividends to existing stock holders that is tax free-they do the dividends reinvestment plan for you and no taxes are paid, a simple tax evasion scheme that sooner or later should closed, either by not taxing dividends, or taxing buy-backs). Thus, in reality, there is no difference in dividend payment policies between today and and 30 or even 70 years ago. Last, just five years ago, the total market capitalization was under one time GDP, and the dividend policies have not changed markedly in those last five years.
