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Degradation for the sake of payouts
Company management often cuts CAPEX (capital expenditures) to pay dividends at any cost and maintain investor trust. This is a short-term victory that creates a long-term time bomb.
Without investment in equipment, R&D, or software, business efficiency drops. At some point, profit stops growing, and the company faces a choice: borrow money to pay dividends or collapse stock prices by announcing a dividend cut.
#Investing #Business