This is a good phenomenon. It is far better that shareholders receive as much of their money back as possible.
If it remains in the hands of management, they will feel the pressure to spend it, just spend it.
Onésimo Alvarez-Moro
See article:
One reason Wall Street is poised to turn in a solid performance in 2006 — the Standard & Poor’s 500 is up nearly 13 percent this year as of yesterday — may surprise you.
“Three years after a tax cut that was supposed to light a fire under the category, dividend-paying stocks are finally taking off,” Megan Barnett writes in SmartMoney. “Through September, the top 100 dividend payers in the Standard & Poor’s 500 had returned 14 percent to investors, handily outperforming stocks with no yields, which had logged 5 percent returns.”
There are both positive and negative factors driving the surge.
The tax cut, which caps the federal government’s share of dividend payments at 15 percent, is apparently finally taking hold and, according to Ms. Barnett, “as baby boomers age, they covet the steady income of dividends.”
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