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India_Bull
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Joined: 19/Sep/2006
Location: United States
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Posts: 2296
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   Posted: 17/Apr/2007 at 1:45am |
I would personally like that any of my company for which I hold stocks utilise the money to explore opportunities to grow and use the money sensibly rather than distributing to shareholders and paying tax as well on it (and should try to increse the stakeholders returns.)
Finally the promoters gain more than small investors like me (e.g Premji- Wipro) and Rs.2/3/3.5/4 per share (Of Value 2k) is peanuts and look at the expenses, e.g A person who has got 10 shares of FT will get 35 Rs. as dividend but I dont think the administrative expenses (of courier etc etc) are less than Rs.10
Similarly for Annual reports, company shd get the email details frm shareholders and mail/upload them on Internet rather than spending money on printing, distributing etc...
Some of my thoughts may be ahead of time and not feasible/practical at this moment but I would love to see that happen someday 
Edited by SANDEEP - 17/Apr/2007 at 1:57am
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India_Bull forever Bull !
www.kapilcomedynights.com
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xbox
Senior Member
Joined: 10/Sep/2006
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Posts: 2001
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Posted: 17/Apr/2007 at 5:55am |
Sandeep jee, very noble thoughts. Hutchison Whampoa Limited is one company which does not follow dividend concept.
Here, I try to make a point on your concept ...
All a company gives back to shareholders is dividends, bonus and splits. Bonus and split only benefits stock brokers (I appreciate one TED for this, so far I was not aware who gains from such events) as all wealth/liabilities of the company are divided by bonus/splits ratios, so at end a shareholders still keeps same as before.
So only thing company gives out to shareholders is dividends. Remember price is not given by company. It is discovered by speculators/traders in open markets. If we stop dividends concept, then what company gives back to shareholders. Nothing. A wealth creation is no function of dividends. INFY, WIPRO, RIL are all heavy dividend + growth stock. All of them give 100% -300% dividend per year and they created enormous wealth. It means that every year they fork-out 1 -3 times of equity capital to shareholders, still they are growing with fast pace. Dividend yield is market term not a company's.
<<on lighter note>> It is like ..a well settled son (stock), does not give anything back to old parents (shareholders).
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Don't bet on pig after all bull & bear in circle.
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manishdave
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Joined: 05/Aug/2006
Location: India
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Posted: 17/Apr/2007 at 9:20am |
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There is another way of distributing money to shareholders. Buyback. And in that case company has some influence in price - or price has influence on company action. Not all company at all the time can reinvest efficiently. Ultimately business is done to get more money. Sometime company that can not invest in their own busines they try to 'Divorsyfy'(as per P lynch) and is not good. Dividend is much better.
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basant
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Joined: 01/Jan/2006
Location: India
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Posted: 17/Apr/2007 at 9:38am |
Not all company at all the time can reinvest efficiently. Ultimately business is done to get more money.
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Very relevant point but less then 1% of the companies realise this. Most of them are always eager to get into newer businesses.
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Vivek Sukhani
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Joined: 23/Jul/2006
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Posted: 17/Apr/2007 at 9:50am |
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Indian companies , I mean, most of them, do very little to think about shareholder's returns. We have companies which trade at a price less than their book value. I think such companies must immediately shut its business, sell its business pay off liabilities and repay back. But nobody listens. They say they are here for business and not for capital markets.... they dont think it their responsibility that their stock market price is a reflection of their reputation. Somehow, I have terrible dislike for such concepts and thats why I have mostly ventured into multinationals for with them I am sure, uf their stock market price is beaten down, they will get into buy-back with no hesitation but Indian companies and even the biggies are all too willing to dilute their stake forget about buying back....
Edited by Vivek Sukhani - 17/Apr/2007 at 9:52am
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Ajith
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Joined: 06/Aug/2006
Location: India
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Posts: 1284
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Posted: 17/Apr/2007 at 9:53am |
A company has to be high-class and high-growth like Bharthi Tele or Berkshire Hathaway to not pay dividend and still command a premium valuation.
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Ajith
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basant
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Posted: 17/Apr/2007 at 10:01am |
As long as Return ratios are more then 20% these things fall into place. The priblem of paying dividend and avoiding to pay arise because capital is not used efficiently.
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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Vivek Sukhani
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Joined: 23/Jul/2006
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Posted: 13/Jun/2007 at 12:07pm |
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Rd was looking a very chnged man today.....he talked of yields at least 4 times.....I was having my breakfast then and was enjoying it all the while a beautiful lady(she comes very occasionally nowadays...) was also there on CNBC, but the moment Shri Shri RD ji started his talk and the moment he talked about 5 p.c. yields, I almost bumped off....it was a dream shattering talk which he did today.....normally CNBC doesnt show yield investors, but i couldnt make out what 5 p.c. yield stocks he talked about???????in the space where the great Shri Shri RD jee recommends scrips, 5 p.c. yield ke liye chiraag lekar ke dhoondna padega.... however, bade log ki badi badi baatein.......better to ignore them to safeguard your future....or has the great Shri Shri RD jee change his outlook on sectors......as far as I know its only sectors like shipping, fertilisers, paper, chemicals, oil and gas, where you can spot such yields.........sectors where great people like Shri Shri RD fear to tread....at least, I always thought so....
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