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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It is the hope that every stock will eventually pay dividends.
The current price is the expected value of those dividends in the future. I.e. buy it now for $1 and it has a 30% chance in 10 years it will be giving you $10 a year.
More risk, lower price. Higher expected payout, higher price.
Sometimes that never happens because the company goes bankrupt, goes private, or something, but at that point they will pay you the value of the company at that time.
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