An old tale in India is if you blindfold or ask people that are blind to touch an elephant and then ask them what they imagine the animal looks like, you will get many answers. One will touch the large legs, one will touch smooth tusk, one will touch floppy ears, one will touch the swinging trunk and one will touch the big body. All will be right and all will be wrong, because the elephant is both large and multidimensional. It use to be most transactions were relatively easy to be put together, now they generally are complex. When transactions become complex, we try to bring them to their simplest explanations enabling more to understand. Through bringing something complex to simple, also means accepting some basic assumptions and can lead to group think. For many activities there is nothing wrong with it and it comes with the territory. In the financial industry, returns are unknown, but expected, however looking back is a different story the signs and answers can easily be seen as they are crystal clear. Thus it is important to look at a wide range of opinions including some who see numbers differently. While most of us tend to read and associate with people that see the world the same way as we do, which is not a bad thing, once in a while the other party is correct.

Linking to dividend paying stocks, one of the reasons why this blog writes about this subject is at the very basic whether a stock pays a dividend or not is easy to see. To pay a dividend on a consistent matter means the company makes money or is profitable, most companies on the stock exchange are not, they have promise for the future. Many of them have great ideas and they maybe the best ones, time will tell. For the dividend paying stocks, questions of sustainability, should the dividend be raised, lowered, and other questions can be raised. But if you start with a profitable company which consistently pays a dividend, no matter how you see the numbers, as long as payments are made, in the long run stock prices will increase.

There are more questions than answers, till the next time – to raising questions