Withdrawing dividends and sequence risk

[mathjak107]

It may very well be a great saying with not much meaning for a long time .


if only that would be the case with companies that pay out dividends but corporate stupidity is not isolated because stocks pay dividends . these stocks can squander more money than their non div payer relatives .

Some cases in point .

AT&T paid $100 billion to enter the cable business

AT&T thought it would be a good idea to diversify by paying $100 billion to take on cable company TCI. It was wrong! AT&T broke itself up a few years later and sold off the cable assets.

AT&T tried to elbow its way into the personal computer business with a hostile $7 billion takeover of NCR. It didn't work, and AT&T later spun the company back out at a $4 billion valuation.

Microsoft paid an estimated $500 million for mobile phone company Danger. It was supposed to be working on new phones for Microsoft, but most of the key employees left the company. The end result of the acquisition was the Kin, a social smartphone from Microsoft that totally bombed.

Cisco probably bought Pure Digital, the company that makes the Flip, right at the peak of its value in 2009. Since then high definition video cameras have been built into just about every smartphone making the Flip pretty much worthless in the long run. Which is probably why Cisco killed the $590 million acquisition .

After Google bought DoubleClick, Microsoft tried to keep up by buying ad company aQuantive for $6 billion. The acquisition never really worked out. The aQuantive executives left two years after the deal closed and the technology was discarded.
..
AOL-Time Warner is obviously the worst

Benz lost 30 billion buying Chrysler

Quaker bought Snapple for 1.3 billion and ended up selling it for 300 milllion .they lost 1 billion dollars on that deal .

Coke wasted 34 million on new coke which failed …there was never a reason to reinvent the wheel

i can go on and on. In fact on the non dividend payer side Buffett has quite a few major blunders

There is no more smarts in dividend payers than non dividend Payers and in fact they likely have lost and squandered more money as a group

[mathjak107]

Don’t forget one can do the same withdrawal from a non div payer and take 3-4% out .so taking one’s money back isn’t something a dividend payer has a lock on .

But I agree with k374 .. if I can’t trust the company to make good decisions why own it .

If I buy a company I don’t want that company giving me back my own money so I can put it somewhere else , or if I reinvest just hand it back to them and say no thanks anyway.

I want to own a company because I think they will do well with all the money I gave them.

One thing about a lot of dividend payers is they take on not only the normal meeting of earnings , revenue and market risk but they actually have another level of risk added which is dividend risk .

Dividend payers are very sensitive to what they payout and if a dividend is cut or not increased if expected , that stock can take a nasty hit .

Just look at some of the stocks like GE or GM OR CITI or any of the other number of stocks that had cut or suspended dividends and got pummeled for it