undefined | Better HN

0 pointstedunangst6y ago0 comments

Companies borrow money to pay dividends too.

0 comments

rumanator6y ago

>>Companies borrow money to pay dividends too.

The very definition of "dividends" is precisely distributing profits to it's shareholders.

formercoder6y ago

No, it’s retained earnings ending balance = retained earnings beginning balance + net income - dividends

Nothing about dividends vs buybacks has to do with where the cash comes from.

rumanator6y ago

None of the elements of your equation reflects borrowed cash. In fact, you acknowledge that dividends are drawn from earnings. So what's your point?

umanwizard6y ago

Well, all I can say is get a new dictionary, because companies really can and do borrow money to pay dividends.

Of course, any bailout would have to have terms preventing this, and it should prevent immediately spending it on stock buybacks too.

rumanator6y ago

> Well, all I can say is get a new dictionary,

Great umanwizard, it's a good thing you're here to tell us that Cambridge university is wrong! After all, what do they know about finance and economics?

https://dictionary.cambridge.org/us/dictionary/english/divid...

robocat6y ago

This is clearly false: there are plenty of value companies with high volatility of profits and low volatility of dividends. Certainly I have seen loss making companies still pay dividends.

AnimalMuppet6y ago

No, the definition is a payment from a company to stockholders that's labeled "dividend". I know of companies that were losing money that still paid dividends.

teruakohatu6y ago

I am out of my depth here but isn't that because of a shortfall verses expected profits, or restrictions on moving money around the world (apple) verses borrowing huge amounts of money at low interest rates to give investors a tax advantage and giving management large bonuses?

j / k navigate · click thread line to collapse

0 comments

rumanator6y ago

>>Companies borrow money to pay dividends too.

The very definition of "dividends" is precisely distributing profits to it's shareholders.

formercoder6y ago

No, it’s retained earnings ending balance = retained earnings beginning balance + net income - dividends

Nothing about dividends vs buybacks has to do with where the cash comes from.

rumanator6y ago

None of the elements of your equation reflects borrowed cash. In fact, you acknowledge that dividends are drawn from earnings. So what's your point?

umanwizard6y ago

Well, all I can say is get a new dictionary, because companies really can and do borrow money to pay dividends.

Of course, any bailout would have to have terms preventing this, and it should prevent immediately spending it on stock buybacks too.

rumanator6y ago

> Well, all I can say is get a new dictionary,

Great umanwizard, it's a good thing you're here to tell us that Cambridge university is wrong! After all, what do they know about finance and economics?

https://dictionary.cambridge.org/us/dictionary/english/divid...

robocat6y ago

This is clearly false: there are plenty of value companies with high volatility of profits and low volatility of dividends. Certainly I have seen loss making companies still pay dividends.

AnimalMuppet6y ago

No, the definition is a payment from a company to stockholders that's labeled "dividend". I know of companies that were losing money that still paid dividends.

teruakohatu6y ago

j / k navigate · click thread line to collapse