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I'd argue that's the main benefit. At least that's what I gleaned from the Financial Markets course taught my Robert Shiller. You own stock so you can get paid

I'd argue that's the main benefit. At least that's what I gleaned from the Financial Markets course taught my Robert Shiller. You own stock so you can get paid dividends. That's what provides its inherent value which underpins a lot of how the stock market works (at least at a theoretical level).

the_watcher 8y ago
Roughly 40% of global stocks don't even pay dividends [0], so that's pretty clearly not the only reason to own stocks. [0] https://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2014/02/04/7-myths-about-dividend-paying-stocks https://money.usnews.com/money/blogs/the-smarter-mutual-fund... (from 2014, but the number likely hasn't changed substantially)
- iaabtpbtpnn 8y ago
  In theory, the price of a stock reflects the market's expectation of future dividends. In practice, the market expects lots of things that aren't true.
  - Gibbon1 8y ago
    I've come around to the idea that stocks have an intrinsic value as collateral/store of value. I saw that with a family that owned a condemned property. They couldn't rent it but they sure could borrow against the land price (ever rising) minus the cost of demo'ing the old building. I also think stocks tend to keep up with/beat inflation and thus are better than cash as a store of value.
    - dredmorbius 8y ago
      Bingo. So long as asset value inflates, it's good for cash via loans. The moreso if asset inflation > nominal interest rates.
  - umanwizard 8y ago
    The expectation doesn't have to be a certainty for this to make sense. If there is an 0.01% chance of paying $10,000 dividend, or 100% chance of paying $1 dividend, the expected payout is the same.
- nopzor 8y ago
  A stock only has value (theoretically) because it offers cash flow to owners. that cash flow is created by eg distributions (dividends) or as a result of an acquisition. If a stock will never create cash flow for the owner it theoretically has no value.
smsm42 8y ago
I don't have any data handy, but intuitively I would argue the majority of people owning stock never do anything to control the management of the company, neither they want to. They want the part of the revenue stream that is produced either by dividends or by stock appreciation, that's it. Of course, there are activist investors, but saying all of them are such sounds wrong.
TeMPOraL 8y ago
Almost. From what I've observed, the main reason to own stock is to flip it to the next sucker for more than you bought it for. I don't often see people caring about dividends directly. I guess that's a job for index funds?

the_watcher 8y ago

Roughly 40% of global stocks don't even pay dividends [0], so that's pretty clearly not the only reason to own stocks. [0] https://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2014/02/04/7-myths-about-dividend-paying-stocks https://money.usnews.com/money/blogs/the-smarter-mutual-fund... (from 2014, but the number likely hasn't changed substantially)

iaabtpbtpnn 8y ago
In theory, the price of a stock reflects the market's expectation of future dividends. In practice, the market expects lots of things that aren't true.
- Gibbon1 8y ago
  I've come around to the idea that stocks have an intrinsic value as collateral/store of value. I saw that with a family that owned a condemned property. They couldn't rent it but they sure could borrow against the land price (ever rising) minus the cost of demo'ing the old building. I also think stocks tend to keep up with/beat inflation and thus are better than cash as a store of value.
  - dredmorbius 8y ago
    Bingo. So long as asset value inflates, it's good for cash via loans. The moreso if asset inflation > nominal interest rates.
- umanwizard 8y ago
  The expectation doesn't have to be a certainty for this to make sense. If there is an 0.01% chance of paying $10,000 dividend, or 100% chance of paying $1 dividend, the expected payout is the same.
nopzor 8y ago
A stock only has value (theoretically) because it offers cash flow to owners. that cash flow is created by eg distributions (dividends) or as a result of an acquisition. If a stock will never create cash flow for the owner it theoretically has no value.

smsm42 8y ago

I don't have any data handy, but intuitively I would argue the majority of people owning stock never do anything to control the management of the company, neither they want to. They want the part of the revenue stream that is produced either by dividends or by stock appreciation, that's it. Of course, there are activist investors, but saying all of them are such sounds wrong.

TeMPOraL 8y ago

Almost. From what I've observed, the main reason to own stock is to flip it to the next sucker for more than you bought it for. I don't often see people caring about dividends directly. I guess that's a job for index funds?