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But that is not why people buy stocks.They buy them because they believe the company will do well and be worth more . These are thousands of stock that pay no dividend and make investors lots of money.
I doubt anyone cares if in 20 years they may one day be a dividend payer. In fact few will even own it that long.
But that's the overall point. It doesn't technically matter what part of the business cycle you own the company in, eventually it has to return profits to its owners or it would be worthless. This can be through returning equity to shareholders or liquidatig the assets, but eventually its underlying value is its assets and its expected future cash flow. You don't have to care that that is true, but it is.
Let's say a company's growth slows down and it DOES begin to pay out these dividends, which some of you believe is so important. The fact is, because of the reduction in share price on the ex-date, dividend payouts are a WASH. From a total return perspective, the investor has gained nothing.
How do you reconcile the above with your belief that investors MUST have dividends at some point? How can it be so critically important for investors to receive dividends when there is NO REAL BENEFIT TO THEM? Hmmm?
Lol, we are talking about different things all together. You both are very stuck on the "stock" itself. I am talking about investment theory. Forget about the word dividends, you both can't seem to get past that word. The bottom line is eventually a company is only worth it's expected future profits and its real assets. You can invest in a company because you think reinvesting current profits will increase future assets or because it is actually paying money to its owners. If you are buying a "stock" because it keeps rising you are speculating. If you are buying a share of a company because it has strong expected growth that will eventually lead to ever more profits then you are investing.
We understand how a dividend payment impacts the share price and thus the market cap. That is irrelevant to this discussion.
If a stock is plummenting, the dividend doesn't mean anything and if the stock is plummenting due to poor performance, a high dividend adds more risk because chances are that dividend will need to be cut or eliminated if things don't turn around.
Lol, we are talking about different things all together. You both are very stuck on the "stock" itself. I am talking about investment theory. Forget about the word dividends, you both can't seem to get past that word. The bottom line is eventually a company is only worth it's expected future profits and its real assets. You can invest in a company because you think reinvesting current profits will increase future assets or because it is actually paying money to its owners. If you are buying a "stock" because it keeps rising you are speculating. If you are buying a share of a company because it has strong expected growth that will eventually lead to ever more profits then you are investing.
We understand how a dividend payment impacts the share price and thus the market cap. That is irrelevant to this discussion.
never confuse a good company with a good stock. they are not the same thing. you can be the best run company in the world but with little or no analyst coverage you got nothing.
it can take way longer than you got time many times for good companies to be recognized and become good stocks.
investing only boils down to the stock , whether you make money or not is all that counts. most stocks are owned and traded by institutions and fund families not investors with a love for the company. few care long term about most stocks as few own them for great lengths of time anymore.
stocks function more as trading vehicles than buys forever..
Last edited by mathjak107; 01-10-2015 at 06:55 PM..
never confuse a good company with a good stock. they are not the same thing. you can be the best run company in the world but with little or no analyst coverage you got nothing.
it can take way longer than you got time many times for good companies to be recognized and become good stocks.
investing only boils down to the stock , whether you make money or not is all that counts. most stocks are owned and traded by institutions and fund families not investors with a love for the company. few care long term about most stocks as few own them for great lengths of time anymore.
stocks function more as trading vehicles than buys forever..
There were a ton of "good" stocks in 1998-1999. How is Pets.com (IPET) doing today?
The dot coms and tech stocks were amazing for making money. Most were sucky companies but great stocks. Those that tried to marry them or did not pay attention to valuations got burned.
Our funds made lots of money in them but they were smart enough to shed them as valuations became rediculious.
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