The point is if the company doesn't pay dividends, what will it do with the money? It has to grow, and growing isn't always a good idea. It means they have to e

The point is if the company doesn't pay dividends, what will it do with the money? It has to grow, and growing isn't always a good idea. It means they have to expand either by being more competitive (cheaper, undercutting their existing business, less profits) or by moving into a market they don't know about (risky, might loose it all). Looking at it another way, what's the point in owning stock in a company that never pays dividends. There's no point a company making profit unless they give that profit out. > Dividends are actually the same as selling a piece of your investment. Who are you going to sell the piece to? If it's back to the company as part of a share buyback, then yes, it's the same. If it's to someone else, then no, by not paying a dividend, the company now has to spend that money on something useful that will generate a return and mean it can pay a dividend in future.