It is about time! Businesses spending on CAPEX. Imagine that!
Corporations have several choices in using their cash flows.
- Pay a dividend
- Buy back shares
- Pay down debt
- Buy other companies
- Invest in their business
Paying dividends is not such a bad idea, but growing the business should be first.
Buying back share has been the rage for a while, but with stocks so high, does it make sense? No.
They can pay down debt, but much has already been refinanced at low rates. Why get rid of a low cost "loan"?
Buying other companies, which Wall Street investment banks are pushing now, is usually not wise. Everyone is getting excited ( with Wall Street's help), but that results in huge over payments and very long time lines to get reasonable returns.
Why not invest in your business? What a unique idea?!! It is about time we are hearing this. Reinvesting is like compounding in a portfolio. It builds long term values!
It is like an epiphany to corporate Amermica! Quality companies consistently add to their capabilities by significant re-investing in their businesses.
