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Without dividends, stocks wouldn't exist as a financial instrument, as there's otherwise no payout for the person stuck holding shares of the company at the end
by kd5bjo 10y ago
Without dividends, stocks wouldn't exist as a financial instrument, as there's otherwise no payout for the person stuck holding shares of the company at the end.
In a purely rational market, the value of a stock should be the present value of future dividends that share will pay out. Price fluctuations reflect investors' changing estimates of what that ultimate payout will be, based on how well the company is doing.
- xapata 10y agoDividends or the expectation of asset liquidation. A company can wind down and sell its patents, for example. I suppose you could say the sales proceeds are dividends as well, but they're not what one typically thinks of as dividends.