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?
In: 76
The analogy is you own the baseball team, not a baseball card. As the owner of the team you could pay a dividend (extract cash) or keep the cash invested and working to make the team better and more profitable.
Latest Answers