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For sure, dividends donesn't mean nothing here. If a company is profitable and don't pay dividends to shareholders, they need to do something with the money tha
by edpichler 9y ago
For sure, dividends donesn't mean nothing here.
If a company is profitable and don't pay dividends to shareholders, they need to do something with the money that are accumulating, and they will invest on the company (new machines, products, services, etc. all accordingly with the company strategy), and if the company grows with this investments, the stock price will follows it.
- iamgopal 9y agoHow stock price follow it ? In a hypothetical scenario, if company declare not to pay any dividend any time in the future, nobody will invest in it no matter what.
- edpichler 9y agoBecause the money is on the bank, and it's shareholders property. The shareholders can change the administration council and hire people that will use the accumulated money to make more money, or use it paying dividends. The shareholders are the bosses, and chooses who occupies the administration council. I don't know if my hypothetical example was clear.
- repsilat 9y agoIf the company is closely held the shareholders may not be able to meaningfully affect the composition of the board of directors, and so may not be able to extract any value from it except in bankruptcy.
- laichzeit0 9y agoReally? Bitcoin pays no dividend and people buy it, even though at this point it's basically as useless as a stock that pays no dividend. I say this as a Bitcoin holder who does nothing with his Bitcoin because it's too slow and the transaction fees are too high.