When dividend is raised, the stock price is usually up (Cisco's 10% up in one day due to dividend boost; I have a large bet on Cisco based on my 'Buy and Forget' for deeply valued stocks that have been beaten down by this economy). I'm taking some profit as there is no change in the fundamental.
CEOs' compensations usually include a good percent from stock options. So, it is wise for them to raise dividend. However, raising too high will not be good for the company if they need the money for research and product development. Most high tech companies need money to build a better mouse trap to replace the mouse trap they built several months ago; Apple's continuous upgrade on iPhones is a good example.
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