20120320 Follow Me 313 How to spend it

For those industries which need rapid development of high technology, I don't think paying much dividend is a wise choice.

First of all, they need to update their products as soon as possible, otherwise the profit is easily to turn into loss, which will cause cash shortage later. And investing in technology will bring tax benefit, while paying dividend often results in dual taxes: the enterprise income tax and the individual income tax.

Second, what investors expect most is the rising price of the stock, hoping to  turn them billionaires over one night, which cannot be achieved simply by dividends.

The third reason is that dividend often acts as a signal to the market. Even if the company can afford high dividend this term, it doesn't mean the high amount can be sustained in the following years, and the fluctuation of dividends will cause negtive effect to the company's market value as well as impose heavy burden on the company to meet the requirement of large amount of cash to pay dividends.

To sum up, I don't think paying high dividends is a very wise choice to those companies in the high technology industry. If I were the CEO or CFO, I would try to find some investment opportunities to spread the industry risk and to increase the stability of payoffs.