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Old 05-04-2017, 07:14 AM
 
106,238 posts, read 108,237,907 times
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stop!!!!! dividends come right off the existing share price value . end of story . everything else has already been reflected in the appreciation or depreciation of your share value up to the moment of ex div.

how the company did and how markets perceived it was already all reflected in your value right up to the moment they broke a piece of your EXISTING share value off and handed it to you . there is nothing to dispute. it was already all your money prior .
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Old 05-04-2017, 07:29 AM
 
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All dividends are being reinvested per the original post. The only thing that matters is the change in the net asset value.
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Old 05-04-2017, 07:36 AM
 
5,342 posts, read 6,149,423 times
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Quote:
Originally Posted by mathjak107 View Post
stop!!!!! dividends come right off the existing share price value . end of story . everything else has already been reflected in the appreciation or depreciation of your share value up to the moment of ex div.

how the company did and how markets perceived it was already all reflected in your value right up to the moment they broke a piece of your EXISTING share value off and handed it to you . there is nothing to dispute. it was already all your money prior .
Not true at all. That is where we disagree. Dividends come out of cash flow, they are reflected in the stock price at ex-dividend date, but the company isn't actually reaching into your share of stock and taking the dividend out of it. They pulled cash out of the company and handed it to you, when cash leaves a company it only makes sense that the share price would reflect the exit of said cash. Funny thing is as far as I can see investing is all about future cash flow, not yesterday's cash flow. Look at Amazon trading at a 200x P/E, do you think that is because of today's cash flow or the future potential cash flow? Because investing is about future cash flow if a company trading at 15 cents offers up a dividend of 25 cents and can pay it the stock price will immediately jump up to reflect a share value of at least 25 cents because it's free money. Again, this happened in the instance of Kroger see below

Quote:
For example, Kroger (KR) closed at a split-adjusted $4.53/share on August 31, 1988. The company was paying a quarterly dividend of 3.50 cents/share. In September 1988, the Kroger company was being pursued by a private-equity firm. In an effort to fend off the private equity acquirer, Kroger announced a special dividend of $5/share, as well as a note payable to shareholders in the amount of $1/share. At the end of December 1988, the stock was selling at $1.11/share. Those two special dividends unlocked hidden value in the share price, which didn't really show up on August 31, 1988. The value of Kroger in the hands of a private buyer was about $7/share, which was much higher than the share price. The special dividends for $6 unlocked this extra value for shareholders.
Does Paying a Dividend Reduce a Company’s Value? - Dividend Growth Investor

This is why I strongly recommend you read a book on investing. You talk about wanting to educate people and you refuse to educate yourself in many instances. You need to start looking at your 'stocks' as ownership in a company and not ownership in a piece of paper that is traded on a stock exchange. Then perhaps you will learn something
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Old 05-04-2017, 07:43 AM
 
106,238 posts, read 108,237,907 times
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they are not 100% correct . they better read finra rules for dividend payment . they are also referring to market action on the stock .

the market action will always be on x-amount invested . the payment reduces the amount you have compounding . you can stop trying to despute it.

if you don't reinvest the div you have market action acting on a reduced starting amount .

what is going to be worth more ? if hypothetically the stock got an 8% gain on 19,765 if i don't put the dividend back in or 8% on my 20k before ex div , in my example of verizon .


market action is on all your own money .



FINRA MANUAL :

5330. Adjustment of Orders

(a) A member holding an open order from a customer or another broker-dealer shall, prior to executing or permitting the order to be executed, reduce, increase, or adjust the price and/or number of shares of such order by an amount equal to the dividend, payment, or distribution on the day that the security is quoted ex-dividend, ex-rights, ex-distribution, or ex-interest, except where a cash dividend or distribution is less than one cent ($0.01), as follows:
(1) Cash Dividends: Unless marked "Do Not Reduce," open order prices shall be first reduced by the dollar amount of the dividend, and the resulting price will then be rounded down to the next lower minimum quotation variation.
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Last edited by mathjak107; 05-04-2017 at 07:53 AM..
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Old 05-04-2017, 07:49 AM
 
5,342 posts, read 6,149,423 times
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Quote:
Originally Posted by mathjak107 View Post
they are not 100% correct . they better read finra rules for dividend payment




FINRA MANUAL :

5330. Adjustment of Orders

(a) A member holding an open order from a customer or another broker-dealer shall, prior to executing or permitting the order to be executed, reduce, increase, or adjust the price and/or number of shares of such order by an amount equal to the dividend, payment, or distribution on the day that the security is quoted ex-dividend, ex-rights, ex-distribution, or ex-interest, except where a cash dividend or distribution is less than one cent ($0.01), as follows:
(1) Cash Dividends: Unless marked "Do Not Reduce," open order prices shall be first reduced by the dollar amount of the dividend, and the resulting price will then be rounded down to the next lower minimum quotation variation.
-------------------------------------------------------------------------------
And you go back to quoting FINRA, which handles the adjustments of share prices. Continue investing like you are trading pieces of paper, I will continue investing like I am investing in a company that generates cash every quarter. I am not disagreeing with you on the fact that on ex-dividend date the stock price has to drop by the amount of the dividend. What I am disagreeing with you on is that a perfectly well functioning company can go to zero if it continues to pay out a dividend. Remember it doesn't get adjusted on the announcement of a dividend, just the ex-dividend date. All the companies I invest in declare dividends payable on XX date. So if a company trading at 15 cents declares a 25 cent dividend payable on June 10th, what do you think would happen to that share price? Would it stay the same or go up? So....bottom line is a dividend isn't the company reaching into your share prices and cutting out a piece. A dividend is a company paying out cash to shareholders. When that happens the company by definition becomes less valuable, thus FINRA adjusts the share price down to reflect that loss in value. Again the difference between thinking about it as a piece of paper and thinking about it as ownership in a company. One is very short sighted the other is much more holistic. I'll let you pick which is which. I know Warren Buffet thinks one is better than the other.

And to follow up on your edit. I am not talking about what is more valuable. I agree that total returns are most important. I am arguing with you on your simplistic thinking when it comes to what dividends are. You think they are a piece of your share price being ripped out and sent to you. That's not even remotely close to the case. I'm trying to educate you, but you seem to continue to focus on the very simple facts you have managed to learn. It's like having a discussion with a tape recorder that managed to after many years record a few things. Now you can play your tape back to people. You do know a lot about a little I will give you that, but you also refuse to learn anything new. I would strongly recommend you read Ben Graham's The Intelligent Investor to get an understanding of what is really going on when you are investing. You are retired now, so you have the time You have a mutual fund mentality. Start thinking about what that mutual fund represents. Shares of ownership in businesses. Now start thinking about what it means to own a business and you are then on the right track.
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Old 05-04-2017, 07:56 AM
 
106,238 posts, read 108,237,907 times
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it is what it is , you are mixing up market action on the stock with the value you are starting with and the value you end with each quarter , year or how ever you want to measure it .

ALL COMPOUNDING IS ON YOUR OPENING BALANCE EACH TIME FRAME YOU WANT TO USE . if you pull money out from what you had via the div you have a smaller opening balance because of the reduction . hence market action is on less dollars than you had prior to ex div and the mandatory reduction, if you reinvest you have the same amount working for you , it is such a simple concept .
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Old 05-04-2017, 07:59 AM
 
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The ex-dividend action isn't the sum total of all of the price activity of a stock. During the rest of the time, the stock price fluctuates based on many of the same factors that affect all stocks, such as liquidity, sentiment, corporate performance, etc.
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Old 05-04-2017, 08:00 AM
 
5,342 posts, read 6,149,423 times
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Quote:
Originally Posted by mathjak107 View Post
it is what it is , you are mixing up market action on the stock with the value you are starting with and the value you end with each quarter , year or how ever you want to measure it .

ALL COMPOUNDING IS ON YOUR OPENING BALANCE EACH TIME FRAME YOU WANT TO USE . if you pull money out from what you had via the div you have a smaller opening balance
Market action is one of the biggest parts of investing. You specifically said, and all that I addressed is, that if a company continues to pay out a dividend and not go up in price it will eventually go to zero and not be able to pay out a dividend. I simply said that dividends don't actually come out of the share price they are just reflected in the share price as a loss of cash (hence a reduction in the value of the company) so what you said is not true. If a company declared a dividend that is higher than the current share price the market value would jump to reflect that 'free money', consider it arbitrage, thus it would always be able to pay out a dividend as long as it could feasibly do so from an operations and cash flow perspective regardless of share price. That was all my comment was about.
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Old 05-04-2017, 08:02 AM
 
106,238 posts, read 108,237,907 times
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just go back to basics . if you spend the dividend your opening balance is smaller than it was the night before . market forces act on less dollars .
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