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TheStreet Open House

Yahoo! Is Out of Reasons for Not Paying a Dividend

Stocks in this article: YHOOAAPLGOOGMSFTIEP

NEW YORK (TheStreet) -- Yahoo! (YHOO) needs to incorporate the Apple (AAPL) model of buying back shares and raising its dividend. Yahoo! is cash-rich and about to enjoy another Alibaba-fueled payday, and yet it doesn't pay a dividend.

Marissa Mayer, Yahoo!'s CEO, has been at the helm for almost two years and to date the most remarkable company achievement is the rate Yahoo! is buying other businesses. Mayer has spent more of the war chest in acquisitions during the first 16 months than the previous 16 years before her. So far, Tumblr ranks as the largest for $1.1 billion.

YHOO Shares Outstanding Chart

Using some of the cash hoard towards making shareholders rich instead of more startup owners will do a lot more to boost the share price. Buying Web properties the company will struggle to monetize is a difficult proposition for me to get my head wrapped around when the core brand is far from executing efficiently.

In other words, buying company after company is a waste of money until Yahoo! can get its own house in order. A smaller problem is easier to fix than a larger one. Yahoo! doesn't need more Web sites missing vowels in their names. It needs to effectively compete with Google (GOOG) and Microsoft (MSFT) first. Then, after all eight cylinders are firing properly, expand prudently as opportunities become available.

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