Dividend laws are just beyond stupid.

[SmileyRose]

So, I have a couple shares of Citi stock as part of a spinoff from Ford Stocks years ago. I have absolutely no idea how Citi can even be paying dividends (didn't they need bailout moolah??)

So I get a check for 1 cent per share. A grand total of 6 whopping cents. They spend more than a buck to print the dang page, 40 odd cents to mail me my 6 cents. Why do they do this idiotic thing you ask? Why because the federal gooberment REQUIRES them to send me my money regardless. And the weird part of the whole thing is that obviously publicly traded companies don't mind this or else they would have had their hired lackeys (aka Congress) just change the law already.


:crazy:

[On the Road]

1. I Don't Understand the Psychology of Dividends

Corporations are very, very loathe to cut dividends. A lot of older people use them for living expenses, and they send a horrible signal to the financial market that usually results in the stock taking a dive.

There is nothing preventing a company from eliminating dividends - very growth companies in technology or other fields pay dividends at all. I can only assume that BoA wants to be able to look back in five years and claim that they have always paid a dividend for the last eighty years ro whatever.

I agree that Citi should not have been using bailout money to reward investors and that a dividend of a penny doesn't make a whole lot of sense. But why would you want to change the law to control this behavior?

[SmileyRose]

4. I'd like to see them

change it so that the law stipulates an amount ( whatever roughly average amount it costs to print the check and mail it) - and if the total amount of the dividend check is at or below that amount then then dividends are put in escrow to be paid on the next quarterly check. Not the total per share but the total of the check.

Obviously it doesn't happen all that much or else the corps would have had it changed already.

[On the Road]

8. Depending on How You Own the Stock

you might be able to choose to reinvest the dividends so you don't see the ridiculously small checks.

[Orrex]

2. When I worked for a mutual fund company...

I once spent six full days trying to track down a discrepancy of $0.07 to satisfy our audit group. I'm not exaggerating.

Additionally, I had to involve two other workers for part of the time.


Some of these wacky companies treat a discrepancy of one penny the same as a discrepancy of $1M. Not sure if that's good or bad, in the long run...

[TechBear_Seattle]

3. It is not the company, but federal regulators

The regulation of mutual fund companies and other firms involved in the securities trade is very strict. Quite literally, every penny must be accounted for. This is not bureaucratic nonsense, but lessons hard-learned after decades of reacting to fraud.

[Orrex]

7. Well...

When dealing with other companies, I learned that mid-level managers had the ability to write off $10 or $25 with no trouble. That may or may not be square with federal regulations, but it made a lot more sense than devoting ~60 worker-hours to a seven-cent issue!

[Uncle Joe]

5. So what are you going to do with your earnings?

:)

[Zywiec]

6. Why aren't you reinvesting the dividends?

Then you wouldn't have to worry about them until you sold, or they went bankrupt.

[demodonkey]

9. At 6 cents a quarter, what, it would take like 50 years to get one new share?

:shrug: