Grow Your Money: The Rhodes Society

Should dividends be outlawed? Take for example the perverse scenario in General Electric in twenty seventeen.  Management cut the dividend by half. The stock dropped by eleven percent that day.  Did this shock shareholders?  I doubt it.  The company had been bleeding cash.  The firm continued to pay dividends regardless.  The share price had already dropped from thirty to twenty dollars.  Bad management lacked the courage to do the right thing.  The takeaway is that there is a strong rational for well managed firms to not pay coffer draining dividends.  And many stocks today do not pay dividends.  This fact pokes a stick in the machinery of dividend yield investors.  Beating the Dow is a classic read by Wall Street practitioner Michael O’Higgins.  Another is Stocks for the Long Run by Jeremey Seigel, a finance professor at Wharton.  Both books show that investors can get a few percentage points in return over the indexes buying stocks that pay lots of dividends relative to the stock price.  But watch out! Rec