This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Sirius XM, Dell to Investors: We Give Up

NEW YORK (TheStreet) --From time to time, a voice diverges from the crowd and gets things right.

After expressing discomfort over the financial media's collective decision to praise Dell's (DELL) decision to issue a dividend, TheStreet's Marek Fuchs made the best point of all: ... [T]raders should be concerned (even if the media is not) that a company engaged in the cumbersome process of remaking itself in a fast-changing industry, should think thrice about giving their money away to shareholders. Acquisition and research and development are probably better uses of cash. Now there's a thought that might pay dividends.

That's exactly what I was thinking when I watched Maria Bartiromo interview Dell Chairman and CEO Michael Dell on CNBC. Talking about Dell's shift away from the consumer to the enterprise (enterprise accounts for about 80% of Dell's business), the CEO was as stiff and convincing as your favorite politician.

I do not have much of an opinion one way or the other on Dell's ability to successfully complete this transition. Given the broad range of well-established competition the company faces, I'm certainly not optimistic. And the idea of a dividend at this stage of the game actually frightens me.

Returning capital to shareholders. It's en vogue. In theory, it looks like an excellent move. What's wrong with providing investors a bit more wealth? Often, quite a bit.

I keep a majority of my portfolio in dividend-paying growth stocks. To a company, it's really impossible to question the logic behind or the veracity of the decision to not only issue a dividend, but buy back significant amounts of stock. Most of the firms I hold have been doing both for quite some time. Thanks to strong businesses, most increase the dividend on a consistent basis and not only continue, but raise the value of the buyback program.

I consider a dividend as well as a buyback a reward, not an entitlement. It's a way to spread even more prosperity among the masses. (We're a well-positioned, strong and sustainable company. You're in a relatively sound investment, so, here's some icing on the cake.)

Companies such as Dell bastardize what returning capital should be all about. It should absolutely not be used a pacifier. (Things are going to stink for a while longer. We're not sure how long or if they'll ever get better, so take this to hold you over.) If things get really bad, I guess it's better that shareholders received something before the creditors.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,960.57 -123.23 -0.72%
S&P 500 1,978.34 -9.64 -0.48%
NASDAQ 4,449.5640 -22.5440 -0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs