Why Investors Want Cash Now Instead of Future Gains

investor gains savingsBarry Schwartz believes a company that is increasing its dividend or buying back shares is a far better investment than one more committed to raising capital expenditures. The chief investment officer at Baskin Financial Services Inc., a wealth management firm in Toronto, thinks it’s a no-brainer.

“Have there ever been any studies showing that companies that increase capex over time outperform, because I haven’t seen one,” he said. “But I’ve seen lots of studies that show companies that buy back stock outperform companies that don’t, and companies that increase their dividend every year outperform. These things are the word of god when it comes to outperformance.”  Read More…

This article has 8 Comments

  1. Nelson Wynantz

    It all comes down to greed. People want to keep buying stuff to satiate this morning's needs and so need the money to do so. So they are impatient when it all comes down to it.

    And hey, i am one of them 🙂 and proud of it!

  2. Zeke Pitzer

    Not to rain on anyone's parade but all companies will have to deal with capital expenditures at some point. This is the nature of capitalism. Because it isn't paraded to the media at all times doesn't mean that they aren't there. And it certainly doesn't mean the establishment is in a downturn. Not by any means.

  3. Earnest M.

    Very good advice about looking for stocks that buy back than constantly increasing capex. This is so true. I learned to hard way when i was younger.

    Most new investors should learn and study this very closely. It seems obvious but most people don't take it to heart.

  4. Presley

    I believe the 2008 crisis will shifted the mentality and most investors are too scared to focus solely on capital expenditure out of fear that investors will think the business is on a downturn. Better to focus on other aspects even though this will, in the longterm, hurt the bottom-line.

  5. Dyllan S.

    I thought this article was going to be about me, the investor, and a preference for cash over investing. I now know it was more about a company's perspective, not the individual. Still a fascinating read.

  6. Raul

    Shareholder distributions in canada are at a all time high so this story does have merit.

  7. Otto R

    Hey try the best of both world via divdend income. Sure its more for elder people who are retired but there are some good finds that will bring a steady flow even for non-retirees.

  8. Yousef Osborn

    Renewed respect from investors? Really? In my 30 years in this game it capex has never been a good sign. It's not a red flag but more a beacon of potential internal issues. I have never found it to be a positive thing. Especially if the business looks to it continually.

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