PEET - the stock I want to buy but can't
PEET
Comment: I want to buy it because it's my last name! But I am only buying dividend paying stocks. By the way, be sure to visit the Peet's Coffee & Tea website (I am not associated with this company other than the fact I buy their coffee & tea)
Do you steer away from nondividend paying stocks because of the principles of sensible asset allocation--dividend-payers being more stable--or because paying dividends aligns corporate minds along the idea of actually earning profits, or a little of both?
ReplyDeleteI've thought for a while that our current culture of stock options and no dividends at a lot of companies simply sets their execs up with the idea that goosing the stock price is what you do, not build long term value.
Investors invest for income. Income can take 2 forms: stock value growth and / or dividends. Probably two stocks that would be of the first would be Apple and Google. IBM is in the middle paying out a 1.8%. Obviously it takes money to keep up the growth (research and development). So a company can't pay all their income out.
ReplyDeleteI do think that CEOs need to consider that investors want income. The older set (me) are looking for it more near term. Not that I need the dividend income (we just pay taxes on it and reinvest it).
Two stocks that don't pay dividends where we did OK. One was Fifth Third (the income was in the form of realized capital gains). The other is Ford where I bought very low (recession level low) and there has been significant stock gain.