Subject: RE: a stocks and dividends question
From: "Chris Maeda" <chrismaeda@attbi.com>
Date: Thu, 9 Jan 2003 15:35:14 -0800

It is all about double-taxation.  If you are a 
public company with excess cash, you can either
distribute it to shareholders as dividends
or do something with it that will enhance
the share price -- buy another company
or do a stock buy-back.

Dividends are taxed at the shareholders'
marginal tax rate, usually around 40%
give or take.  A stock buy back, according
to the argument, raises the stock price
which increases the shareholders' net worth
without triggering a taxable event.  If a 
shareholder wants to sell, he or she
can presumably sell and with good planning,
have it be taxed at the lower rates for
long term capital gains.

If you think about it, you can see how the
double taxation of dividends helps distort capital
markets by rewarding companies that pump up their
stock prices while undervaluing companies that
generate real cash flow.

-----Original Message-----
From: Tom Lord [mailto:lord@emf.net]
Sent: Thursday, January 09, 2003 3:00 PM
To: fsb@crynwr.com
Subject: a stocks and dividends question

Why aren't dividends a more prominant factor in valuation?  
(So, maybe this _is_ about double taxation after all.)