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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there are three main ways to monetize stock (outside of selling it to someone else, which is just passing value)
1. as you pointed out, dividends. Company may or may not decide to pay dividends in the future.
2. stock buyback. In some instances, you don’t sell stock to another investor, but back to company. This means that there are more money in the market, because you don’t just sell to each other, but also gaining money from the company. If the company continued perpetually, eventually most of the investors would be paid out.
3. someone else either buying or merging the company. usually, part of the deal is in cash, so you’ll get some money back. If you invested early, it might be much more than you originally invested plus you usually also get to keep some stock of newly formed company
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