joined a conga line of big technology firms paying dividends , including Apple, Microsoft, Oracle, Intel, and Cisco Systems. And that’s a clear-cut good thing, right?
Well, according to the media, yes. The 8 cents a share will be doled out starting in October, amounting to a dividend yield of about 2.7 percent. Dell’s shares were up well over 6 perent in after-market trading yesterday and the media saw grounds for celebration too. There is, if you believe ’em, no cause for anything less than a dance in the streets.
The Associated Press, Forbes,Business Insider, and most other media simply ran articles containing a statement from Dell trumpeting the raw brilliance of the move, but no counterbalance from anyone questioning its long-term wisdom.
All Things D and The Wall Street Journalwere, at best, agnostic about the move. Seeking Alpha at least did well to council a “wait and see approach before considering buying the stock.” They want to make certain that Dell is developing a “dividend culture,” where dividends will be protected and increased rather than “just going through the motions.”
As Dell’s stock flies on the dividend announcement, “wait and see” is an important caveat emptor. Moreover, traders should be concerned (even if the media is not) that a company engaged in the cumbersome process of remaking itself in a fast-changing industry, should think thrice about giving their money away to shareholders.
Acquisitions and research and development are probably better uses of cash — now there’s a thought that might pay dividends.
—By Marek Fuchs, Contributor, TheStreet.com
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TheStreet’s editorial policy prohibits staff editors, reporters, and analysts from holding positions in any individual stocks. At the time of publication, Marek Fuchs had no positions in any of the stocks mentioned.