Greenlight Company Presentation
Doubling the Dividend
Stock will move substantially
and trade to a dividend yield
Greenlight Capital, Inc.
Reality:
AT&T
5.1%
Altria
5.0%
Verizon
4.6%
Intel
4.3%
Merck 4.0%
Wisdom:
More often than not, a substantial
dividend increase at best puts a
floor under a stock
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There is a conventional view that if Apple wants to return money to shareholders, the best way to do
so would be through a large dividend increase. In fact, that is the direction Apple took last year when
it initiated a $10.60 annual dividend.
The conventional hope is that the stock would move up substantially and trade to a quote "dividend
yield."
The reality is that equity investors value companies using a number of metrics that have little to do
with the common dividend yield. In our experience, for the dividend yield to be the primary support
for the stock price, it has to be rather high. There are a number of blue chip companies trading at
more than a 4% dividend yield, some of which we show on the slide.
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