More Companies Be Raising Dividends

Posted by D4L | Wednesday, January 16, 2013 | | 0 comments »

The S&P 500 (SNPINDEX: ^GSPC) dividend payout ratio -- the percentage of earnings paid out to shareholders as dividends -- is at an all-time low. Frankly, this is a tragedy. Instead of writing checks to shareholders, companies are instead spending incredible amounts on share buybacks and acquisitions, both of which have a dismal history of providing shareholder value.

Share buybacks tend to ramp up when shares are most expensive, subsidizing existing shareholders at the expense of loyal shareholders. And acquisitions are often done at irrationally high prices, allowing management to "empire build" but rarely creating lasting value.

Source: Motley Fool

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