Why Did Dividends Disappear?

Find me on Substack: https://bogumilbaranowski.substack.com/

Daniel Peris is a historian-turned-portfolio manager at Federated who uniquely combines PhD-level expertise in Russian history with two decades of investment experience to challenge modern finance's dismissal of dividend investing through rigorous historical analysis.

3:00 - Peris shares his unconventional path from Cold War studies and Russian history PhD to Wall Street, explaining how his historical training shapes his contrarian approach to investment challenges by questioning where current financial rules originated and whether they remain fit for purpose.

8:00 - Historical perspective on financial innovation: Peris argues most "new" financial mechanisms have ancient antecedents.

10:00 - The humility principle: Peris critiques University of Chicago's equilibrium economics and rational actor theory for not comporting with actual human behavior, advocating learning from 5,000 years of financial mistakes rather than assuming modern superiority.

14:00 - The great dividend disappearance: Four key reasons dividends vanished - 40 years of declining interest rates, NASDAQ's productivity boom, the rise of buybacks incentivizing Wall Street, and global neoliberalism's focus on financial over cash returns.

18:00 - The turning point thesis: All conditions enabling the "unnatural state" of dividend-free investing have stopped, reversed, or matured, setting stage for return of the cash nexus.

23:00 - Business outcomes vs market outcomes: Peris distinguishes tangible dividend payments (business outcomes you control) from speculative capital gains (market outcomes dependent on share price volatility).

30:00 - The tax avoidance extreme: Peris critiques products designed to avoid taxes on S&P 500's meager 1.2% yield, calling it philosophical gymnastics to dodge taxes on essentially no income.

38:00 - Risk redefined: Permanent loss of capital constitutes real risk, not price volatility, challenging academic definitions that dominate MBA curricula.

42:00 - The buyback controversy: A trillion dollars in free cash flow goes to buybacks benefiting Wall Street and executives rather than shareholders, with Peris emphasizing buybacks provide liquidity to share sellers, not cash to shareholders.

52:00 - PE expansion and gravity: While acknowledging modern infrastructure justifies higher valuations than historical 10x earnings, Peris questions whether 25x multiples make sense, especially in inflationary environments.

57:00 - Global perspective: Anti-dividend phenomenon is distinctly American.

1:04:00 - Success philosophy: Peris defines success as "knowing when you have enough" (citing Joseph Heller), sleeping well at night, and making 50.05% of decisions correctly under uncertainty.Podcast Program – Disclosure Statement

Blue Infinitas Capital, LLC is a registered investment adviser and the opinions expressed by the Firm’s employees and podcast guests on this show are their own and do not reflect the opinions of Blue Infinitas Capital, LLC. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice.

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