@MrEarl
Out of interest, do you have the same view on any company paying dividends?
It's difficult to get into to much discussion without talking about specific shares.
Interestingly, Warren Buffett adds the view that a company should only buy back shares where the management believe their shares are undervalued by the market. If you look at some of the big tech companies, their share buybacks are pushing prices higher, and you'd wonder are they actually returning value to shareholders.
Hello,
My views on Dividends are somewhat different, while I appreciate why you are asking.
As I write this post, I actually find myself struggling a little, to explain exactly why, not least because I'm good with capital gains from share price growth, along with dividends.
I think that for me, it could be down to how the company trades over the long term. For value stocks, I like companies to have continued modest growth, year on year, with annual earnings split between further investment and annual distribution to shareholders, by way of dividend. Each year's reinvestment of partial earnings expected to later increase the company's earnings further and by extension, the capital value of the company.
As for my old friend Warren, who's views I respect the large majority of the time that I hear them, I don't agree with his reckoning on this one. I believe that markets are efficient and that they price shares correctly, quickly adjusting prices as new information becomes publically available etc.
Management often have conflicts of interest, so should they be allowed tamper with a company's share price via share buybacks?
.... didn't cash it because the charges were too high on GBP cheque. I've a similar issue with the value of shares Vs transaction costs to sell them.
Putting aside the unfortunite demise of the company that you've mentioned, DRIP schemes are often the better option, for those with modest holdings in foreign currency shares (where a DRIP scheme is available, obviously).