10-31-2014, 08:18 AM
(10-30-2014, 08:16 PM)EricL Wrote: My thoughts are if a company has that variable of earnings and can't plan their business reasonably enough to cover their payments to shareholders I probably don't want to own them long term.
I agree with this but on the other hand I also think it's smart of management to not to overextend themselves and promise more than they can handle to keep the business in operation.
However, it could also mean that the business is too cyclical and/or unpredictable for them to plan for that. That's the reason why I've never looked at the auto manufacturers as an investment. That's why I took a close look at DE's history before buying. That also is a cyclical industry. CALM went to that policy in the Great Recession and I sold them at the time.
Personally, I've come to the mindset that I find it angering that senior management generally gets a pay raise every year, sometimes (most of the time?) even better than the rest of the employees. As one of the owners, I expect my "paycheck" to increase also. I can handle a freeze for a while if the reasoning makes sense but bouncing up and down is not for me.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan