Corporate Finance: Dividend Policy, Strategy, and Analysis

Earlier we analyzed stock repurchases.

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

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,

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