Tuesday, September 27, 2011

What is the rationale for the following finance policy at Dell?

Dell has never declared or paid any dividends on shares its common stock and currently does not anticipate paying any cash dividends in the immediate future.





Please explain.|||Not all stocks pay dividends. Investors seek the capital gains through growth and are willing to forfeit current income to get there. Some people look at dividends as siphoning the income and retained earnings from a company, which it is, and that retards potential growth.





I will acknowledge that their policy made more sense early when Dell was growing. Now that they are a mammoth and have been for some time, they probably should pay something out.


|||Dell believes it ca earn a higher rate of return on it's investments than it's shareholders. Also there's capital gains tax vs. income tax on dividends differential.

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