How important are dividends? - Aussie Stock Forums

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  1. #1
    nioka's Avatar
    Join Date
    Jul 2006
    Northern N.S.W.

    Default How important are dividends?

    How important are dividends to you?.There seems to be a growing trend for companies I hold, or have held, to think an investor should be happy with capital growth and ignore the need to distribute some of the profits as dividend.
    I would prefer to receive a fully franked dividend and decide for myself if I wanted to reinvest it in the company or another company of my choice. There is also the need for "petty cash" to be taken into consideration. I liked the old Coles scheme of opting for reinvestment (or not). That choice is no longer available.
    I sold my ARQ shares because I came to the conclusion that they would continue to use profits in a continuous search for a bigger and better oil strike which may or may not eventuate before the company is worthless. In the meantime the directors are highly paid to enjoy the thrill of the search.
    I hold a few that don't pay dividends but I hold in the hope that they are developing companies that I would expect to pay dividends in the near fruture when they have produced income streams. eg. AGM, AOE and LYC.
    I hold others that are prospective and I do not expect them to get to the dividend point while I hold and I will sell them when they reach the goal I have set for them. eg. ADI,TAS,FNT and AUT.
    I believe all companies should have in mind the goal of a dividend supporting income stream.

  2. #2


    Quote Originally Posted by nioka View Post
    I believe all companies should have in mind the goal of a dividend supporting income stream.
    Depends on the companies goal, ENG (Engin) has a goal to continue to build its clientel which in turn keeps them running at a loss. My cousin tells me (hes 1 of the top managers there) that once they have a large enough customer base for various services they will sell it off for big dollars so if there is a takeover for a profitable company to jump in then its share prices should move up for a capital gain.

    Each company is different. Thats why you have a portfolio of speculation stocks and well managed stocks (producing a good income for its share holders to enjoy). Specs are risker but can provide a trade off for a higher capital gain.

    A good balance is what i say is needed

  3. #3

    Default Re: How important are dividends?

    They pay the rates. They pay the car registration. They pay house and contents and, car insurances. They assist with funds to invest. They good stuff.

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