2018-07-02

Dividends Vs Share Buybacks

Scope And Purpose Of This Post

This post is a work-in-progress and right now is mostly a collection of pertinent snippets/summaries of articles on the matter of dividends vs share buybacks vs other.  Some basic points:
  • Many arguments in favor of dividends are fatally flawed.
  • Many arguments made in favor of dividends are actually arguments in favor of dividends and share buybacks.
  • For individual investors, with their tax-normal investments, share buybacks are superior to dividends due to how they're taxed differently.
  • For corporate investors, dividends can be superior to share buybacks due to taxation differences.
  • For tax-advantaged accounts (401k, IRA), "share buyback vs dividend" doesn't matter.
  • The more a company is undervalued, the better share buybacks are, and the more a company is overvalued, the worse share buyback are, but it is foolish to think you know better than the market about the proper value of a company.
  • Even if a company is undervalued, a share buyback may be inappropriate if there are good investment/growth opportunities available to the company.
Some more points:
  •  A share buyback financed by debt can be thought of as a shift from equity-based financing to debt-based financing.  Interest rates are currently low and interest payments are tax-deductible (while dividends and share buyback payments are not), so this shift to debt-based financing can make a lot of sense.

2018-07-01

Thoughts And Articles On REITs

Scope And Purpose Of This Post

This post will be a perpetual work in progress, where I will share article, snippets, and my own thoughts about REITs, with a focus on "how much of my portfolio should be REITs?".  Currently my answer is "about what you already get with a total stock market index fund".

Article 1: The Role of REITs in a Diversified Portfolio

https://www.advisorperspectives.com/articles/2017/08/21/the-role-of-reits-in-a-diversified-portfolio

author: Larry Swedroe

Sam Soundar Biweekly Newsletter #8, Use Scrollwheel To Zoom Edition

Treasured Subscribers:

Sam Soundar has just published his ninth romantic comedy novel, Nception: The Unplagiarized Story Of Dream Crime.  Take a look at the following reviews.

"I was absolutely floored by the foreword, pleased with the preface, idolized the introduction, and prized the prologue.  But what about the colophon?  Oh, hoho, the colophon was only bested by the epigraph!" ~ Reginald Rolokoaster

"Nception clearly has the best table of contents and index I've seen in the last century of romantic fiction.  The glossary has no parallel in all of dramatic literature, and has convinced me to reconcile with my estranged children." ~ Gertrude Grinner

"Nception is an engrossing tale of love and human connection.  I simple could not put the book down as I read appendices C through J and their associated errata." ~ Hazel Ahaviel

"On a scale from zero to ten, I'd say it was decent." ~ Mortimer Quickpunch

Word of the biweek: putrid
Definition: decaying or rotting and emitting a fetid smell.

Example sentence: Steve and Larry, strained and strained as they tried to lift the putrid cow corpse over the chain-link fence; no one must know about their failures as pet sitters.

Your nonsensical newsletterer,
Jacob