|reply to DataRiker |
Re: Doesn't Think It is Fair For Government To Help
said by DataRiker:I would suggest the biggest, not only, beneficiaries are those with resources and access to restricted equity/debt vehicles. This shouldn't be surprising to anyone. The mantra, it takes money to make money, holds true. The layperson can overcome the limitations of mutual/index funds by educating themselves and managing their own money. The layperson has relatively easy opportunity to not be a layperson when investing in equity/debt markets.
They only real beneficiaries are insiders with huge amounts of a particular stock. Huge and Particular being the key words here.
Huge and Particular are not the domain of the lay person when it comes to stock. When you consider mutual funds often invest in multiple companies of a particular sector then it all becomes a wash. One companies gain is another's loss in saturated markets.
said by DataRiker:I disagree about seemingly small increases in a company's payout of capital to shareholders. As an example, let's consider AT&T. T currently distributes $1.80/yr. With a closing price of $35.00 on 2 Jan 2013, that equated to a yield of 5.1%. T's 2013 dividend increase of 2.3% is the newest one on top of 29 years of consecutively growing the dividend. Now, lets consider a fairly small investment of 200 shrs in T at the close on 2 Jan 13. That equates to an investment of $7000 with a annual dividend payout of $360. If the stock goes sideways the whole year, that's still a 5.1% return on capital, far better than any savings vehicle available today. Now assume that T continues growing it's dividend at 2.3% for the next ten years, or to $2.26/yr. That's a 25.6% increase and even without reinvesting dividends, takes your $360/yr payout to $452. Assuming a sideways stock and no reinvestment of dividends for a decade, you will have received $4448 in cash, for a 63.5% return on capital. So, those seemingly small increases in dividends do pay over the longterm. As many people are fond of complaining doesn't happen in our markets anymore, this is why people invest for the long term in certain equities. Dollar-wise, will a person with millions to invest make more money than one with thousands? Of course, but the percentages don't change.
Further more, suppose a lay person does have a particular stock, it is highly unlikely that this person owns enough stock that a 1/2 percent dividend increase will make much a difference.
For exec's and wealthy with huge amounts of stock this is extremely significant.