RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Is CJ buying shares? Good discussion and I have a couple points to also bring in here...
If everyone or most of the industry becomes debt free, bidding wars amongst companies for consuming companies, services and extras will become very prevalent and we begin a new cycle, similar when credit was cheap and easy and the solution was pump more to get revenues up so that banks will fund more. One major problem is that if every company is paying in cash there will be fewer consequences to the mind set because where is the downside? It's not interest to be paid.... It will be great for investors in winning companies because we will consume others share prices will skyrocket, but metrics will also disconnect quite a bit in prep for a new crash. Let's also not forget that if we get into a cash arms race, an easy way not to have it go out the door is to cut the payouts to shareholders.
Further on that on a longer look down the road, Nuttell for a couple years preached about Free Cash Flow to Market Cap ratios and how long it would take a company to consume all its shares and go private. It was an interesting point he brought up but not for the reasons he used it for as a value indicator. As shareholders we would benefit from prices rising with fewer shares which is what we all like with NCIB, but most of these shares taken off the table they are mostly eaten from traders and retailers (unless of course a bigger player jumps out), altho all holders gain, the bigger ownership groups gain stronger percentage controls than you and I and it can make it easier for them to take the company private from under us which benifits fewer in the public. It's a longer run game but has the ability to play out as we as a small group lose our vote powers.
These are bleak outlooks and not likely to happen on a major scale, but the possibilities are there even tho the probabilities are low. Just interesting things to think about
When it comes to the dividend the company cares little about the yeild, they don't control it and they can't use it as a measurement, the market decides the yeild. The company can control the amount paid and the payout ratio which is usually what they make decisions based on in CJ's case thier target is 50% if not in payouts than in NCIB which basically act as our supplementals or specials. The only time I've heard of a company use the Dividend Yeild as a metric for thier own use was Pembina and they mentioned it as a reason NOT to increase the payout because they felt the market wasn't appreciating the payout they were making already, which ment they felt thier shares were already undervalued and that paying out more would not add to shareholders value. (There are likely more cases but that's they only one I know of mentioned directly from the company CEO).
10% itself is a great yeild very agreed, but the only reason we are at 10% is because shares have pulled back and/or have not reverted back to the normal average range which at one time was about 7-7.5%. That might not be a the range we see become the norm again, but it likely will not sustain 10% longer term. It would also be expected that should they raise the payout that the yeild to the market will not change too much as the market should catch itself up within a few weeks following any payout change.
Using the yeild might be a good metric on why you should currently invest or seek information on how price action is acting, but it's use in predicting what a company itself is likely to do going forward is not a good policy to get into the habit of, but it can be somewhat useful in predicting where a share price might go, but that can also be a fools game, tho it is one trap I can sometimes fall into myself.