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Technology Stocks : PSFT - 1999: The "Make-It-or-Break-It" Year? -- Ignore unavailable to you. Want to Upgrade?

To: David W. Ricker who wrote (458)	4/8/1999 8:31:00 AM
From: Chuzzlewit	Respond to of 1274

David, the usual rationalization for dividends is contained in what is called the residual dividend theory. Simply stated, it contends that when a company can no longer invest its funds at an expected return greater than its average cost of capital it pays the residual to the shareholders in the form of dividends. This is consistent with the idea of maximizing shareholder wealth. Remember too, that share repurchase is a tax-advantaged dividend in disguise. Of course dividends are important ultimately, but they are a negative in growth companies because they signal decreasing opportunities for growth. TTFN, CTC