Corporate Finance: Dividend Policy, Strategy, and Analysis

Earlier we analyzed stock repurchases. http://csinvesting.org/2011/12/08/an-insiders-view-of-capital-allocation-corporate-financie-valuation-case-studies/

Now we beat the subject of dividends to death from all angles especially from an insider’s perspective. Munger, Buffett, Peter Lunch and others discuss dividends http://www.scribd.com/doc/75491721/Dividend-Policy-Strategy-and-Analysis-Value-Vault

Please refer to the charts of the companies mentioned in the document:

WDFC_30 year chart

MO_50 year chart

MRK 50-Yr chart

2 responses to “Corporate Finance: Dividend Policy, Strategy, and Analysis

  1. Very interesting.

    I applied Buffett’s “one-dollar proposition” to a healthcare company that I had seen heavily criticised for retaining too much earnings. I went through the calculation, and discovered that it had indeed added more than £1 of market cap for every £1 retained; and all this despite starting out on a monster PER of 29 and ending up on a PER of 12. So, now I know if the naysayers were right, or wrong.

  2. Hello There;
    Looked the numbers from 1999 to 2011 and this company hasn’t created $1.00 of market value for each $1.00 retained. This was done by deducting the amount spent on share repurchases from the retained earnings.

    Is there an answer key posted somewhere?

    Thank you,
    David

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