As an aside comment, I find it interesting that common stock holders will pay more for a stock when the dividend is increased for no other reason than to return cash to the shareholders. The new tax laws lowering the tax rate on dividends certainly increases the after-tax retention of cash for the stock holder, but does it really do anything to the long term value of a company? If a company's stock price drops to where the current dividend is still safe and provides a better than market (for the risk) rate for the holder, it is natural that some buyers will come in looking at the stock as part bond and part equity and provide support at that stock price. But when a company raises the dividend because of the new tax laws and is simply returning cash on the balance sheet to shareholders, then it is quite different. If a company is not growing and cannot find a better use for its cash, like investing in their business, it seems to me to be a negative, not a positive signal. If a company's business is growing and they increase the dividend commensurately, that seems to me to be a positive signal. Not because they raised the dividend, but because the business is growing. Treasury Secretary Snow has commented that the new tax laws on dividends would drive the market 20% higher. I believe that is folly. Dividend policy in itself does not change the value of a stock. You must analyze the reason for a change to determine whether it is positive or negative.
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