What is the point of investing in stocks without dividends?
Just started investing into stocks and want to know the reason why people invest in stocks that don't have dividends?
For instance, I know if you buy the stock at $100 and 5 years later if the stock is $1000 you can make a profit.
But is that the only reason?
- AmyLv 71 month ago
Simple answer: yes, the only reason is the expectation that you can sell the stock at a higher price than you bought it.
The longer answer is that a stock's price reflects the consensus estimate of its value, and that value is mostly a prediction of future dividends.
Older, established companies almost always pay dividends. The companies that don't pay dividends are usually small, usually younger companies who use their income to grow. There is an expectation that some day they will stop growing and start paying dividends.
- WLv 42 months ago
Buy a good stock and roll any dividends into more shares.
- Anonymous2 months ago
Two words: capital gains. If you don't need the income from dividends then why insist on them?
- tiescoreLv 62 months ago
Intel & Apple didn't pay dividends for years, it just grew and grew then started paying one out. If you were young and didn't need income while you were working and bought Intel or Apple, then just held it now in your retirement years its now paying out a substantial dividend compared to your investment back in the early days you'd feel pretty good about that investment I would think.
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- SteveLv 62 months ago
Have you done any multiplying and/or dividing? Do you know how much most dividend paying stocks cost? The little bit in payout is not worth it to me. If I was rolling in cash and I could buys thousands of shares, then maybe. Im not, though, so I dont buy for a little dividend.
- Christin KLv 72 months ago
Pretty much yes. That's the reason everyone invests. Buy, then sell at a profit. Dividends can be a pittance.
And not all investments are worth getting dividends. My shares in Walt Disney company send me a yearly check under a DOLLAR. It's not even worth depositing. Also, dividends are taxed as income. That's not counting what your capital gains will be from selling the stock at a profit. you get taxed TWICE.
- Donut TimLv 72 months ago
I hope you understand that you do not gain or lose anything from dividends.
When a dividend is paid, the value of the stock decreases by that precise amount, and you end up with the same value in the total of stock and dividend.
If there is no dividend and you need some cash now, you can sell some shares of your stock with the same result as having a dividend - you end up with the same value in the total of the remaining stock and the money from your sale.
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When you buy shares of stock, you are then one of the owners of that company. As part owner, the company’s land, buildings, machinery, inventory, debts and earnings belong to you (and to the other shareholders.). If you have chosen a quality company that steadily earns a net profit each year then it progressively becomes more valuable. You can collect this increase in value when you sell your portions of the company (shares of stock) for more than you paid for them, and also when dividends are paid out.
When you receive a dividend, that money goes to your pocket where it is no longer earning money for you. That's fine if you need money for a purchase. Not so fine if you prefer that money to continue earning more money for you.
- Anonymous2 months ago
I would take a 40% capital gain over 4 years of 4% dividends. Maybe its just me?
- fcas80Lv 72 months ago
You are correct: to make a gain when you sell.
And not everyone needs the income of dividends, which are taxable.
- MattLv 52 months ago
If you only plan to hold the stock for a few hours, days or weeks, dividends are meaningless because you probably won’t qualify for them anyway. Solid dividend stocks tend to have more stable prices which makes them less interesting to stock traders.