The dividends paid by large and established companies may not have a huge percentage gain as that of younger companies, but the returns tend to be stable over time.
Investing in Stocks Without Dividends
Why would anyone want to invest in a company that doesn't pay dividends? There could be significant benefits to investing in stocks that do not pay dividends. Companies that don't pay stock dividends often reinvest the money for expansion to boost overall growth, which means their stock prices may appreciate over time.
Companies that do not offer dividends sometimes invest the potential dividend payment cash in so-called "share buybacks" on the open market. If the number of shares on the open market decreases, the company's earnings per share (EPS) will rise in theory. It also increases the percentage of equity owned by each shareholder.
How to Choose?
There are advantages and disadvantages over investing in dividend-paying stocks and non-dividend-paying stocks.
Most regular dividend payers are large, established companies that are unlikely to fail. They typically perform better in bear markets than stocks that do not pay dividends and are usually less volatile.
However, investing only in dividend stocks can mean missing out on companies with potentially high investment returns, such as technology and pharmaceutical companies. These companies often do not pay dividends, preferring to reinvest their money to develop new products and services.
Milk The Cow : I preferred non dividend for a "non crisis" market as we Singaporean / foreigners get tax 30% on US stock.
JM investor : I prefer non dividend stock in US, dividend stock in Singapore
江南公子 JM investor : same here.