Editor's Note: If you're worried about your retirement in the face of rising inflation, you can't miss the Inflation Emergency Broadcast hosted by Larry Kudlow, former director of the National Economic Council. During this FREE broadcast, Larry sits down with Oxford Club Chief Income Strategist Marc Lichtenfeld to discuss the inflationary ticking time bomb that could go off - at any moment now - and sink 60 million Americans' retirement accounts. But even though the prices of cars and clothing are up 90% and 145%, respectively, there's hope. Marc's "Forever Dividends" strategy is the single best path to a never-ending income stream that can outpace inflation and deliver compounding returns regardless of the direction of the market. To learn how you can beat inflation, click here now. - Bryan Bottarelli, Head Trade Tactician
Marc Lichtenfeld, Chief Income Strategist, The Oxford Club The most common argument I hear from investors who aren't interested in dividends is that the company should be able to find something better to do with its cash than give it back to shareholders. They say that the funds should be used to grow the business either by investing in the business itself or by acquiring new ones. As President Joe Biden would say, "That's a bunch of malarkey!" Let's look at why that argument doesn't hold water. Obviously, I'm not opposed to a management team investing in its business for growth or even buying other companies if it will add to long-term profitability and cash flow. But often, executives spend shareholders' capital on ill-fated acquisitions because the money is there. In my book Get Rich with Dividends, I mentioned a discussion I had with Community Bank System's (NYSE: CBU) then-chief financial officer Scott Kingsley. He explained to me why the company has a policy of consistently returning capital back to shareholders in the form of dividends. He said, "We are very 'capital efficiency' conscious. We believe 'hoarding' capital to potentially reinvest via an acquisition or some other use can lead to less-than-desirable habits." He went on to say that because of the company's dividend policy, when management wants to make an acquisition, it usually must go to the capital markets for financing, which forces it to closely examine whether the transaction really makes sense. Let's Make a (Bad) Deal How many horrible acquisitions can you name? Chances are that management made them because it had the cash on hand, so what the heck? Got to spend it on something, right? In 1994, Quaker Oats (now part of Pepsi) bought Snapple for $1.7 billion. Just three years later, the company sold Snapple for $300 million, losing 82% of its investment. That means $25 per share of Quaker Oats' shareholders' money went out the door and into the pockets of Snapple's owners. Would Quaker Oats' shareholders have preferred a dividend instead? I'm not a mind reader, but I'm going to guess yes. | 
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