"Don't fall for the flim-flam," I think to myself, "demand the cash instead!"
That's why my Permanent Wealth Investor service focuses on the kinds of dividends you can actually hold in your hand. For me, cash is king.
Anything else is simply a magician's trick. It's a sleight of hand designed to make you think you're getting something when you really aren't.
Share repurchases or buybacks are the perfect example.
Behind the wondrous façade, stock buybacks are just a means for management to enrich themselves. The truth is buybacks are positively damaging to the interests of ordinary shareholders.
The Ruinous Truth Behind Apple's Stock BuybackTake Apple Inc. (Nasdaq: AAPL), for instance. It's the stock everybody loves these days.
This $653 billion company recently announced a $10 billion stock buyback over three years, beginning October 1. Naturally, shareholders cheered, believing the buyback would boost the share price.
But consider this: Apple is buying back shares at several times book value, so the buyback will actually dilute Apple's book value per share.