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To: Amit Ghate who wrote (14335)	4/17/2002 4:09:19 PM
From: Bob Rudd	Read Replies (1) \| Respond to of 78708

<<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.

To: Amit Ghate who wrote (14335)	4/17/2002 4:09:33 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 78708

interesting article, Amit. i always like the dividend topic. i think companies should pay dividends early and often. the thing about the double taxation bit...it's not like Congress just recently started taxing dividends and then companies stopped paying them in knee-jerk fashion. rather, there's been a gradual decline over the years as the stock market became a bubble. even as recently as the early 90s, the SPX dividend yield was well over 3%, which was not egregiously far from historical norms. as the mania took hold and fantasy earnings came to replace cash, people looked for all sorts of excuses why dividends were evil...and the taxman seems to be one of the scapegoats. not that i disagree with you that tax policy would be more rational if dividends weren't double-taxed...but i don't think that's the real reason dividend yields have declined. ironically, today's US investor is better equipped to avoid dividend taxation than investors in the past, who required much higher dividend yields across the market. why? IRAs. i stick almost all my heavy dividend payers in my IRAs and thereby avoid the double taxation. there is now what--hundreds of billions, or maybe trillions, of tax-sheltered IRA dollars that could welcome dividends without taxation, but the bubbleonian spirit and decline in earnings quality have kept US investors from demanding cash in hand. in sum, i see taxation as the straw man, behind which hides the remains of the bubble-logic mindset.