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that makes no sense. companies need capital, that's why there is a stock market. dividends are paid from past earnings, never capital (earnings are only a %age
by fsckboy 7mo ago
that makes no sense. companies need capital, that's why there is a stock market. dividends are paid from past earnings, never capital (earnings are only a %age of the value of the capital) and not from higher expectations of the future.
- cluckindan 7mo agoIn a perfect world… reality is different, however. Plenty of companies take on debt to pay dividends, e.g. just before going public.
- fsckboy 7mo agogrowing companies generally have capital needs that exceed retained earnings, so paying dividends would by definition increase capital need.