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View Diary: Rush Limbaugh's downward spiral promises to accelerate (173 comments)

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  •  Wall Street Puts a Higher PE on growth (4+ / 0-)
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    Richard Myers, johanus, elwior, kaliope

    Dividend paying companies are usually, not always (like Apple) at a growth plateau which is why a large dividend like the one's mentioned will reduce the stock price of the company. Sometimes the stock is valued on it's total return which means any share appreciation + dividends.

    Large dividends are usually not a good sign for a company unless it's a Microsoft who had so much cash they declared a special dividend of $3.00 per share. The price of the stock did go down because the share price had stagnated.

    Now-a-days a stocks that pays a 1-3% Dividend is considered a safe long term hold if debt is a percent of equity and other ratios are in-line. You can bet that if insiders hold a large amount of shares that dividend payments will go up. Any company that has to borrow against tangible assets other than cash to pay dividends gets penalized severely. They borrow against cash or other assets when paying a dividend would required them to repatriate overseas cash which would cost 35%.

    Apple calculated it's dividend based on the cash it has in the US. It's overseas cash holdings are in the 85 Billion dollar range. That isn't coming back until some deal is worked out which will happen after the election. Nothing is as it appears. When the bad are so bad that companies that do less bad are seen as good, we know  the slide into the abyss is near.

    That's why Bain's companies get killed in the stock Market or they take them private. They don't care either. The only thing that matters is how much cash they can extract from a company. Rarely , if ever, will a Private equity company try to take the reins of a growth company. It still has share appreciation possibility. They usually go in when the share price has dropped or has stagnated. That's the criteria a PE firm uses to turn businesses into parking lots while walking away with billions .

    They always have been and still are a net minus for the economy. It's still the same unrestrained greed seen in the 80s. It just isn't on the front covers anymore which is fine with the second generation buy-out specialist. They don't need spotlights shining on their work.

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