Why Owners Reinvest Dividends (And Why It Matters)

If we, you, Rich and I, we own a company, we have $75 million that we've declared in dividends, and you and I say we're just going to elect to roll that right back in to the business. Pretty smart decision on our part, because now we've got all that much more capital earning a return on capital. So the very next year, we sit down and we go, wow, we did pretty good because we generated a significant return on that capital that we didn't extract in the form of cash and go and spend it. Outside of all these great advantages, think, think like an owner, because this is a business. And just how many millions of dollars are getting redeployed because the policy owner elected to have the dividend buy a paid up addition? But there was no financial transaction other than the administrative expense of doing that. There was no actual transaction.