Question: Why Invest In A Company That Doesn’t Pay Dividends?

Why would you invest in a company that doesn’t pay dividends?

Reasons to Buy Non-Dividend Paying Stocks

Thus, investors who buy stocks that do not pay dividends prefer to see these companies reinvest their earnings to fund expansion and other projects which they hope will yield greater returns via rising stock price.

What happens if a company doesn’t pay dividends?

Order of Dividends

Preferred stockholders have first rights to a dividend over common stockholders. When a company can’t pay any dividends and then realizes enough revenues to start paying again, preferred shareholders may have back dividends due if the stock is considered cumulative.

What companies do not pay dividends?

Based on the criteria outlined above, the S&P 500 companies that could potentially afford to start paying a dividend are:

  • Biogen Inc. (BIIB)
  • Facebook Inc. (FB)
  • Alphabet Class C (GOOG)
  • Alphabet Class A (GOOGL)
  • Intuitive Surg Inc. (ISRG)
  • Monster Beverage Cp (MNST)
  • Verisign Inc. (VRSN)
  • Waters Corp. (WAT)

Are companies obligated to pay dividends?

Dividends are most commonly given quarterly in cash from retained earnings, but they can also come in the form of stock. Companies are not required to pay any dividends at all, but they may choose to give portions of their earnings back to shareholders as an incentive to keep investing in their companies.