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Posts Tagged ‘dividends’

I have spoken out against Wikipedia’s lack of adherence to its neutral point of view policy, but it is great to get recognition by others in linking to an article on this site in order to provide documentable and accurate evidence in support of serious Wikipedia articles, like this one on the Bank of Montreal, where they linked to my article, Big Five Canadian banks: Consistently paying dividends since the 1800s.

The company has not missed a dividend payment since 1829, paying dividends consistently though major world crises such as WWI, The Great Depression, WWII, and the 2008 Financial Crisis, this makes Bank of Montreal’s dividend payment history one of the longest in the world.[5]”

“[5] “Big Five Canadian banks: Consistently paying dividends since the 1800s”. Faux Capitalism. 2010-07-01. Retrieved 2014-09-19.

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Combination of four currency symbols

Warren Buffett correctly points out that he pays less tax as a percentage of his income than his secretary does, as a result of her receiving nearly all of her income as personal income, while Buffett receives most of his as capital gains and dividends.

Thanks to the Bush tax cuts that were extended by President Obama, the man who promised change, long-term capital gains and dividends are taxed at only 15%, compared to a top rate of 35% for personal income over $200,000.

This is portrayed by the business community as a good thing, and even by some people making far less than $200k a year, with the justification that it’s important to promote investment.

I used to have the view that the government providing a preferential incentive for investing was a good thing, until I gained a better understanding of the proper role of government, and how preferential government incentives can lead to artificial boom-and-bust cycles.

You have three options with your money: You can either spend it, save it, or invest it.

Is spending a lot of your new money ever a good thing compared to investing it? Yes, for example, in the case of high inflation and low interest rates — as is increasingly becoming the case in 2011.

But why bother spending your money now when you can get a big tax advantage on dividends and capital gains, and can even claim any interest paid on borrowed money for such investments as a tax deduction?

Instead of spending your money and possibly putting more people back to work, more money is given to companies so that the executives at the top can award themselves more in stock options and bonuses, and hedge fund managers can make a killing off of manipulating the market, as Jim Cramer candidly admits.

If the market feels that more spending or saving is the order of the day, what business is it of government to create an artificial demand for more investment?

The problem of over-investment is acutely seen with so many would-be retirees who are dependent on their investments for retirement, and got a rude awakening in late 2008 when they depended on a government bailout in order to prop up the market back to its pre-2008 crash levels. Had they not been given an artificial incentive to invest, many would’ve made savings more of a priority, and put their money into less risky places than in a housing market propped up by junk mortgages sold as triple-A securities, and a stock market propped up by the financial services sector with its fraudulent financial vehicles.

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Most companies don’t pre-announce their dividends for the coming year, but BCE (NYSE:BCE and TSE:BCE) is one company that does.

From their Dividend Dates page:

Dividend Policy
Below is a schedule of dates for 2010. Payments are subject to approval by the Board of Directors.

Which goes on to list the pre-declared, though not guaranteed, quarterly dividends for 2010.

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The Big Five Canadian banks and their stocks: Royal Bank of Canada (RY), Toronto-Dominion (TD), Bank of Nova Scotia (BNS), Bank of Montreal (BMO) and Canadian Imperial Bank of Commerce (CM), have been paying common dividends since the 1800s.

BMO, Scotiabank, TD, CIBC, and RBC haven’t missed paying dividends on common shares since 1829, 1832, 1857, 1868, and 1870, respectively.

That is, through WWI, WWII, the Great Depression, all the U.S. and international financial crises, and with and without a central bank.

As of June 30, 2010 prices on the NYSE, their annual dividends are:
RY 3.80%, TD 3.40%, BNS 3.90%, BMO 4.70%, CM 4.90%

Whereas the big five U.S. banks (JP Morgan, Bank of America, Wells Fargo, Citigroup and Goldman Sachs)  are only paying:
JPM 0.50%, BAC 0.30%, WFC 0.70%, C 0%, GS 1.00%

They are also listed on the Toronto Stock Exchange, so you can buy in Canadian dollars to hedge against a declining USD, when appropriate.

In February 2009, I wrote how the Big Five Canadian banks were on pace to dwarf the five biggest U.S. banks, with the the five biggest U.S. banks having twice the market capitalization of the five biggest Canadian banks, despite the U.S. economy being nine times the size of the Canadian economy.

As of the end of June 2010, the five biggest U.S. banks are still less than three times the market capitalization of the five biggest Canadian banks.

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