Dividends Do Nothing For Shareholders (Why Would A Shareholder Prefer Not To Receive Dividends?)

Dividend investors only invest in companies that pay regular dividends. We believe you should be agnostic and invest in any company that is likely to be a good investment – whether it pays a dividend or not. Berkshire Hathaway has been a good investment because it doesn’t pay a dividend. In this article, we explain…

Dividends vs. Retained Earnings (Why Retaining Earnings Is Better Than Dividends)

Dividends vs retained earnings – what is best from a shareholders perspective? In this article, I discuss dividends vs. retained earnings and where the capital compounds best:  in your hands or in the company’s hands. Distributions and subsequent reinvestments are an inefficient way of compounding! Given certain assumptions, it’s better to retain the earnings instead…

Why Tobacco Stocks Outperform (Why Tobacco Stocks Are A Great Investment)

Some months ago I wrote an article about the historical performance of so-called “sin stocks”. Tobacco companies have performed the best in the US, and alcohol stocks in the UK. In this article, I briefly argue for the reasons why and why they most likely continue to outperform. Tobacco stocks outperform the market because they…

Dividend Investing: The Marginal Rate Of Return/Incremental Return (Incremental Return On Investment)

The marginal rate of return is the most important factor to compound efficiently. In the long run, your pension is more dependent on the marginal rate of return than the original investment. If you are into dividend investing, you really ought to study the marginal rate of return on your investments. We argue that dividend…