In fact it is a terrible idea to pay dividends. You can thank the tax code if you subscribe to that school of thought.
These are actually worth quite a lot. But you do make a good point, particularly when it comes to companies like Facebook, who don't pay dividends but have dual class structures so management can't be ousted. I don't know why regulators allow these companies to be floated like that, they're pretty much the antithesis of what public companies are supposed to be. If Zuck's metaverse bet fails (which I anticipate it will), and he doesn't pull another rabbit out of the hat, I expect we're going to see a lot more institutional investors complaining about dual class structures in the next few years.
> A stock is worth the present value of future dividends
1 and 2 are a restating of that. 3 is another way of returning money, but the money still has to be there.
Is this even possible?
“No one” cares about dividends since they are taxed like income and after corporate buy backs going the route next year I wonder what Wall Street will come up with..
2. As an investor, you can't control when and how you're taxed. Dividends are taxable when they are paid out. A company stock buyback, on the other hand, would increase the value of your shares and let you sell when you're ready.
[1] Discounting stocks like REITs which are required to return profit in the form of dividends.
Same could be said about stock buybacks. In principle they're the same, only one has better tax characteristics.
> Rather than investing into itself.
Why would a mature business continue to invest into itself perpetually? What's in it for the investor?