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Re: FMG - Fortescue MetalssNo, increasing earnings is the primary driver of capital growth. And the companies that retain earnings and deploy them at high rates of return will grow their earnings the most.take Berkshire Hathaway as an example, it has not paid a dividend since the mid 1960's when it was $9 per share, now it's $204,000 per share and it earns more than $15,000 per share in earnings.It has only grown it's earnings to $15,000 per share because it has retained every cent of earnings and deployed it into new investments where it can earn a high rate of return.Yes, FMG could reach $6 without paying a dividend, if it focussed 100% of earnings into a mixture of clearing debt, adding to its assets (increasing reserve base, and development pipeline) and buying back its own shares, then yes it could go 20years without a dividend and the capital growth would be very good.
Re: FMG - Fortescue Metalss
No, increasing earnings is the primary driver of capital growth. And the companies that retain earnings and deploy them at high rates of return will grow their earnings the most.
take Berkshire Hathaway as an example, it has not paid a dividend since the mid 1960's when it was $9 per share, now it's $204,000 per share and it earns more than $15,000 per share in earnings.
It has only grown it's earnings to $15,000 per share because it has retained every cent of earnings and deployed it into new investments where it can earn a high rate of return.
Yes, FMG could reach $6 without paying a dividend, if it focussed 100% of earnings into a mixture of clearing debt, adding to its assets (increasing reserve base, and development pipeline) and buying back its own shares, then yes it could go 20years without a dividend and the capital growth would be very good.
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