help me understand it. Most stocks don't pay a dividend anymore, so what's the actual benefit to owning them? Is it just so I can sell them at a higher price to a greater fool later on?
How are stocks without dividends worth anything at all?
Gavin Thomas
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Brandon Ramirez
Stock buybacks make your investment more valuable.
Hudson Hughes
Price history assigns speculative future value. Every marketplace is fundamentally just a time preference function.
Christian Martin
If a whole company is worth just 100 dollars and they have 10 shares outstanding on day 1, then they pay out a $1 dividend on day 2. What is the price of 1 share at the end of day 2 in this simple example? Answer this and I'll answer your question.
Jason Robinson
>Is it just so I can sell them at a higher price to a greater fool later on?
They don't have to be a greater fool. Like said, suppose the company earns a profit of $100 a year and there are 2 $100 shares on the market. The company can give each shareholder a $50 dividend, or it can buy one of the shares and the remaining share is now twice as valuable as it was before. The two only really differ in terms of taxes.
Asher Gonzalez
Look up "Dividend irrelevance"
Here's a good video on it: youtube.com
A dividend being paid out reduces the value of your shares. What do you think happens when a company pays out $100million in dividends? It's now worth $100million less.
Austin Stewart
if the company is worth £1000 and only has 10 shares each share is worth £100. It does not need to pay money out to be worth anything it has inherent worth as ownership of a valuable company.
Leo Baker
well put user
Kayden Collins
Yeah bro. Keep falling for the dividend meme.
Stock plummets 40%,but you'll get muh 3 % passive income
Jayden Gutierrez
If my investment isn't fundamentally worth anything, a rise of 20% value is still zero.
>Price history assigns speculative future value
that's exactly what i'm saying. prices today are based on prices yesterday, and the value is purely speculative.
I value a company based on its cash flow. So show me the company's balance sheet and i'll tell you if a 100$ valuation is reasonable and if a 1$ dividend is reasonable given it's excess cash flow. Then I can answer your question about the price of 1 share on day 2.