Sep

28

I just read this quote supposedly from Jeremy Siegel: "Dividends matter a lot. Reinvesting dividends is the critical factor giving the edge to most winning stocks in the long run…"

Why is this true when there is so much friction in reinvesting dividends vs. the more direct corporate reinvestment. For example, taxation, and the need to buy stock above book value when hypothetically a good company can invest in its business at book value and via earnings and with a decent ROE generate a multiple of that in terms of share price. How can high dividend payout top high ROE or ROIC and a high reinvestment rate.


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