From: CurtAdams@aol.com
Date: Mon Sep 09 2002 - 18:07:52 MDT
In a message dated 9/9/02 16:13:40, dfabulich@warpmail.net writes:
>Of course, you CAN make money off of a stock by receiving a dividend.
>But it's well understood that you don't buy stocks *so that you'll get
>a
>dividend*; instead, you buy stocks so that you can reap the rewards when
>their price goes up (ie, when other people are more interested in buying
>your stock). The reward of owning stock is therefore realized only when
>the stock is sold.
In the end, the stock is only worth the dividends it pays out. The dividends
might not show up until the relatively distant future, though. The assumption
behind these no-dividend companies is that someday, somehow, it'll pay
a larger dividend out to somebody. In many cases the idea is that somebody
else will eventually buy the company and pay out dividends (or the
equivalent, if privately held or a subsidiary).
A lot of people do miss the idea; a company truly committed to never paying
a dividend (and never allowing a future purchaser to pay a dividend) would
be worthless, no matter how much money it makes.
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