I understand that a share of stock represents a share of ownership in a company. But if dividends are not paid, what is the actual value of that stock? Why does it have value? The company making more money does not flow to me because I own the stock. So is it basically just like owning a baseball card in that if the player (company) does well more people want to collect (own) their cards (stock) and this the price goes up?
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Two reasons:
You might invest in a company that doesn’t pay dividends now because you expect it will be much more profitable in the future and then it will pay dividends. For example, you might invest in a biotech company working on a promising drug that hasn’t gone through clinical trials and isn’t approved yet, but the drug could be huge if it does work. Many of the largest technology companies lost money for many years before they finally became profitable.
Also, even without dividends, your stock ownership entitles you to a share of the value of the company if it is sold. If you own 1000 shares out of a million total shares, and the company is sold for $30 million, you would get $30,000.
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