My understanding, feel free to CMIIW:
Basically, the dividend is priced into the stock. When the company releases earnings, there's a certain amount that has to be paid out in dividends so the stock price will only reflect the amount of earnings exceeding the amount that has to be paid out. If there was no dividend, more cash from earnings would be retained by the company and the stock price would reflect the additional cash. In a perfect market, it should even out.
The benefit of solid dividend stocks is that they're able to pay out even when earnings are down, so your returns are more steady and predictable. Of course companies can always change the amount of their dividend so it's important to research how steady the dividend has been over the years and if there's been steady dividend growth.
Well stocks aren't always priced right, so the dividend can be the extra cherry on top when buying undervalued stocks. If you find a good value stock with a dividend it's a must buy.
That was true when I bought MSFT, AAPL, and ALK a few years ago.Reinvest using a DRIP and the profits can add up quickly.
The reason your analysis is wrong is because your forgetting that the most important variable in valuing a company is its growth potential which is speculative. That can change drastically in a short period of time.
LMAO. One day mister yoyo investor says Apple is gonna gonna grow to a trillion dollars and therefore it's worth a trillion dollars? And the next day mister yoyo wakes up and decides Apple will shrivel up and die a slow death and now it's worth 100 billion? Growth speculation accounts for high P/Es in startups and certain companies. For the biggest company in the world you shouldn't be so fickle to expect it to double when you have years of historic data of sales, growth, net income and etc. that doesn't suggest such growth.
I am curious to hear what new Apple products account for the doubling and tripling of apples market cap. And I'm curious to hear what lack of new products 2 years ago accounted for a 50% drop compared to today, where all we have new since then is the Apple watch (bust).
I like investors (speculators) like you.
It gives responsible investors some stocks to make money on.
