Not surprisingly, Zell long resisted the dividend cut, asserting that "dividends drive the company's stock price," according to a real estate finance professional who has clashed with Zell over the issue in the past.
That such a tiny sliver of the population would account for nearly one-twentieth of total dividend income "drives me crazy," Mr. Steelee said.
But more likely is that this dividend wasn't driven by tax planning at all, and that other dividends are not either.
Elimination of the corporate tax should increase corporate profits, repatriate overseas income, increase dividends and drive up stock prices.
"This business can be a good capital generator, helping the company to afford future stock buybacks, pay dividends and drive the expansion of acquisitions across the globe," said Eric W. Aboaf, the chief financial officer overseeing the North American consumer business in an interview yesterday.
Even though buybacks may be more tax efficient than dividends (even after the reduction of the tax rate to 15%), Kelley Wright and Joseph McKittrick of Investment Quality Trends, urge investors not to discount the power of dividends to drive shareholder returns.
But it has lost its flavor over the years because dividend yield is generally driven not just by the stock price but by a company's dividend payout policy.
Income plunged 3.6 percent, though it followed a jump in December driven by dividends and bonuses that were paid early to avoid higher income taxes.
"I would guess dividends are in decline, driven by the bad economic situation," he says.
It is not youth and the so-called "demographic dividend" that will drive American economic growth in the 21st century.
When gainfully employed, this two-generation cohort will become the "youth dividend" that can drive economic growth and prosperity for the next 50 to 60 years.
