Cramer reduced to hyping dividend stocks now.

Discussion in 'Stocks' started by Free Thinker, Oct 21, 2008.

  1. cramer is now saying dividend stocks are the answer to nirvana. i think he is selling his clueless followers another bill of goods. i have never seen the benifit of dividend stocks. at best dividends are a wash short term. whenever they pay out a dividend they reduce the stock price an equil amount so it is a wash. they are just giving you your own money back. i have yet to hear a convincing argument for dividend stocks.
  2. Wait till they start cutting dividends...
  3. yes thats the next thing. he was hyping that 4% yield on c when it was 30 something. now its 14. 50% loss on the stock but you got 4% back.
  4. BAC is a good long term dividend play
  5. Harvest Energy Trust (HTE). Its a trust, not a common stock, so its not exactly an apples to apples comparison. Still its yielding nearly 40%! At its current price, its discounting less than $20 oil.

    Buy it. Join their dividend reinvestment program. Go to sleep for 10 years. Wake up and send your kid to college w/the proceeds.
  6. not unless the stock goes up. do you understand that when they pay a $1 dividend they lower the price of the stock $1? if bac is trading at $25 and they pay a $1 dividend the next day you have a stock trading at $24 and a dividend worth $1.
  7. I agree, except its worse than a wash because you are forced to periodically pay taxes even if you are holding long term.

    I also find the whole dividend reinvestment theory equally pointless. If you want to keep the capital invested in the company, you might as well buy stock in a company that has no dividend to begin with, instead of reinvesting after tax.
  8. kowboy


    Can you answer this question? Being a Canadian trust, isn't the proposed tax to be something like 37%?
  9. There was a research note by Ned Davis Research that from 1972 to 2006, non dividend paying stocks returned roughly 4% per year while dividend paying stocks returned over 10% per year.


    Ironic Buffet owns dividend stocks but Berkshire doesn't declare one.
  10. Does that 4% take into account companies such as failed startups, that generally have no dividends and will skew all non dividend paying stocks lower?
    #10     Oct 21, 2008