In One Up On Wall Street (p. 19), Peter Lynch once remarked that “if anybody’s responsible for the disappearing dividend, it’s the U.S. government, which taxes corporate profits, then taxes corporate dividends, for so-called unearned income. To help their shareholders avoid this double taxation, companies have abandoned the dividend in favor of the buyback strategy, which boosts the stock price. . . Reducing the supply of shares increases the earnings per share, which eventually rewards shareholders, although they don’t reap the reward until they sell.”

I love everything about this Peter Lynch quote, even including the editorial aside that subtly trashes the notion of referring to dividends as unearned income in our tax code. It’s dumb to go through life thinking that the money generated from your labor is the most legitimate source of ways to make money; applying the skill to acquire in ownership interest in a business that … Read the rest of this article!