If a company really makes too much money, let's say PE of 5, or very low price to cash flow ratio. What's the best way to protect shareholders interest, especially the majority holder's interest?
If I'm the majority holder, I would just use the excess cash to buy all the remaining shares and delist it. I don't want to share this enomous cashcow with anybody. Why didn't I do that? because it's not really what it looks on the surface.
The high dividend mostly comes from a dying business or high debt load. It's never sustainable to pay dividend with higher rate than that of a junk bond.
If a business is indeed minting money, it will go private. If it doesn't, it has no more growth, it's a matter of time before it's ultimate downfall.
Investment is simple, you just can't have wishful thinking.
