Bridge over ocean
1 March 2005 Financial Analysts Journal Volume 61, Issue 2

Dividends and the Frozen Orange Juice Syndrome

  1. Peter L. Bernstein

The bonanza of a 15 percent top-bracket federal income tax on dividends has had little impact on values in the stock market or on management decisions about dividend payout ratios. The question is why. Dividends matter, yet investors have forgotten how to think about such factors. This article explains the phenomenon in the form of “the frozen orange juice syndrome” and describes through four chapters of history how the situation arose.

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