Letters to the Editor
Comments Posted On-Line to “The Dividend Puzzle: The Relationship Between Payout Rates and Growth,” by Stanley Block, May 2009:
Dividend yield is a ratio. There are two components in it: the dividend and the stock price. Higher dividend yield might not be caused by higher dividend but lower stock price. “The Dividend Puzzle” might not be a puzzle caused by a high dividend but a puzzle caused by a lower stock price when the dividend yield is calculated. If it is a lower stock price puzzle, then it is not a puzzle anymore because the initial lower valuation of the stock by investors may not have been justified by the
Ganghuai Wang From USA
I’m always suspicious that corporate execs hold back dividends because the price of their personal stock options appreciates more if cash is retained in the business (i.e., shareholders would prefer a 3% dividend to retaining cash in a business growing at 2%). But if executives can grow book and stock price (linked to options), why be ethical?
Louis From Ohio
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