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, retaining the earnings is better than distributing…
“Compound interest is the eight wonder of the world. He who understands it, earns it….he who doesn’t, pays it” -Albert Einstein Presumably, Albert Einstein said the words above, and likewise, Benjamin Franklin said that time is money. Unfortunately, we seem to forget these very simple principles when it comes to most decision-making – be it…
Compounding dividends and DRIP investing are popular. That is understandable because dividends have significantly contributed to long-term gains in the stock market. It’s essential that you reinvest dividends to get the returns of the market, but many investors mistakenly focus solely on dividend stocks because of this. But a company has many opportunities to allocate…
