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Suppose you follow your argument to the conclusion, and no companies issue dividends. What is the point of owning a share of a company then?

whatever1 7y ago
People happily own Amazon/FB/Alphabet stock with no dividend payments.
- mrep 7y ago
  Alphabet just announced a 25 billion dollar stock buyback. Amazon and Facebook are growth stocks so investors don't mind them holding some cash to make investments, fund acquisitions and what not (which is what everyone here seems to want). However, they'll both probably hit a 100 billion dollars in cash in the next 5 years and I would expect dividends/buybacks to follow soon after as that is more cash than anyone reasonably needs.
- dodobirdlord 7y ago
  Do you think that all of those people are insane? Surely you must realize that shares of non-dividend paying companies are valuable because they are expected to eventually begin paying dividends.
- greenleafjacob 7y ago
  They don't (currently) issue dividends because the expectation is they will buy back their stock or will issue dividends in the future. If a company never issued dividends and never bought back their own stock, then there would be no reason for investors to buy stocks in the first place. Most investors don't invest out of the goodness of their hearts, they invest to get a return on capital.
  - K2L8M11N2 7y ago
    Berkshire Hathaway doesn’t pay dividends and most probably never will.
    - gridlockd 7y ago
      Yes, but Berkshire is a holding company, made up of a lot of companies that do pay dividends, are expected to eventually pay dividends, issue buybacks, or are themselves holding companies.
    - mrep 7y ago
      But they have bought their own stock back and they are even considering a whopping $100 billion dollar buyback [0]. [0]: https://qz.com/1611997/warren-buffett-hints-on-timing-of-big-berkshire-hathaway-buyback/ https://qz.com/1611997/warren-buffett-hints-on-timing-of-big...
gridlockd 7y ago
Owning its assets, as in the case of a holding company.

whatever1 7y ago

People happily own Amazon/FB/Alphabet stock with no dividend payments.

mrep 7y ago
Alphabet just announced a 25 billion dollar stock buyback. Amazon and Facebook are growth stocks so investors don't mind them holding some cash to make investments, fund acquisitions and what not (which is what everyone here seems to want). However, they'll both probably hit a 100 billion dollars in cash in the next 5 years and I would expect dividends/buybacks to follow soon after as that is more cash than anyone reasonably needs.
dodobirdlord 7y ago
Do you think that all of those people are insane? Surely you must realize that shares of non-dividend paying companies are valuable because they are expected to eventually begin paying dividends.
greenleafjacob 7y ago
They don't (currently) issue dividends because the expectation is they will buy back their stock or will issue dividends in the future. If a company never issued dividends and never bought back their own stock, then there would be no reason for investors to buy stocks in the first place. Most investors don't invest out of the goodness of their hearts, they invest to get a return on capital.
- K2L8M11N2 7y ago
  Berkshire Hathaway doesn’t pay dividends and most probably never will.
  - gridlockd 7y ago
    Yes, but Berkshire is a holding company, made up of a lot of companies that do pay dividends, are expected to eventually pay dividends, issue buybacks, or are themselves holding companies.
  - mrep 7y ago
    But they have bought their own stock back and they are even considering a whopping $100 billion dollar buyback [0]. [0]: https://qz.com/1611997/warren-buffett-hints-on-timing-of-big-berkshire-hathaway-buyback/ https://qz.com/1611997/warren-buffett-hints-on-timing-of-big...

gridlockd 7y ago

Owning its assets, as in the case of a holding company.