RE: LeoThread 2026-03-23 23-05

Many people claim that receiving a dividend is the same as selling stock
That claim is misleading at best and false at worst
Dividends are paid by the company, with every shareholder receiving a proportional amount

Proceeds from selling shares come from the buyer, so sale prices differ between sellers and can fluctuate by the second
Undistributed cash on the balance sheet is typically valued at a discount by the market

That discount exists because of uncertainty about when cash will be distributed, how it might be allocated, and the risk it could be wasted

Paying a dividend converts discounted balance-sheet cash into cash received at full dollar value
If cash remains on the balance sheet and a shareholder sells, the sale price can be less than the cash's per-share value

Dividends come from excess cash that management deems unlikely to be reinvested at attractive returns
Assuming all cash can be reinvested intelligently ignores that most businesses cannot deploy all cash at high rates of return

Letting large pools of unused cash sit on the balance sheet wastes resources

This specifically debunks the myth that selling shares is equivalent to receiving a dividend.

That myth depends on two incorrect assumptions: 1) every company can reinvest all cash at high returns, and 2) cash on the balance sheet is always valued at 100% — neither is true.

The focus here is on companies with excess cashflow that cannot be reinvested at intelligent rates of return (which applies to most companies)