Opportunity CostTo add a bit of colour to my earlier post regarding shareholder returns, I did a quick calculation of what VNP's current stock price would have to be for investors who bought VNP in in 2007 to breakeven with the missed opportunity of buying a total return index of the TSX (also a much safer investment than VNP due to diversification).
For those who purchased VNP at $7.20 t, VNP would have to be trading today at $25.92!!
It's possible I may not be accurate with my calculations, but I'm confident there is a massive opportunity cost over that period.
VNP share price may do well over the next year, but there will be rough patches at some point, and investors will dump the stock (as they have in the past), because that's the only way to lock in a return. The stock is, and will remain, volatile= boom and bust, with no ability for outsiders to pick the relative max or min.
Dividends could smooth the roller coaster in multiple ways. First off, we would be more likely to hold duriing market downturns, because we know we'll be rewarded . Secondly, the declaration of dividends signifies that managment is confident in the company's future cash flow.