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Dividend-Paying Stocks vs Non-Dividend Paying Stocks

What is Dividend?
Dividends are funded from the company's long-term cash flows and profits each year.
Dividend-Paying Stocks vs Non-Dividend Paying Stocks
Dividends are cash payments distributed to shareholders at regular intervals, with semiannual payments (every six months) the most commonly chosen interval in Australia. However, dividends can also be paid monthly, quarterly, or annually, and even on a one-off basis in the case of "special dividends". Alternatively, a company may not pay a cash dividend but instead offer additional shares of stock to shareholders.

Investing in Stocks With Dividends
Investing in dividend-paying stocks is beneficial to shareholders. Investors can receive a fixed income from their equity investment while holding the stocks to further profit from stock prices. Dividends are money in hand as the stock rises and falls in the market.
Dividend-Paying Stocks vs Non-Dividend Paying Stocks
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.
Dividend-Paying Stocks vs Non-Dividend Paying Stocks
Finally, when deciding whether to invest in dividend or non-dividend paying stocks, you should consider your personal financial goals, your overall investment strategy, and risk tolerance in advance.
Disclaimer:
Moomoo is an online trading platform offered by Moomoo Inc.. In Australia, financial products and services on moomoo are offered by Futu Securities (Australia) Ltd (ACN 095 920 648) , an Australian Financial Services Licensee (Licence No: 224663) regulated by the Australian Securities and Investments Commission (ASIC).

The content is provided for educational and informational use only. Any information and data used in the content are general in nature, for purpose of illustration only, have been prepared without any consideration of your investment objectives, financial situations or needs, and shall not be used to predict future results or trends. You should consider the appropriateness of the information having regard to your personal circumstances before making any investment decisions. No content herein shall be considered as a recommendation or solicitation for the purchase or sale of securities, futures, or other financial products or services (for whatever reason).

All information and data, if any, are for reference only and past performance should not be viewed as an indicator of future results. It is not a guarantee for future results. Investments in stocks, options, ETFs, and other instruments are subject to risks, the value of investments may fluctuate and as a result, clients may lose the value of their investments. When trading in a margin account, clients may suffer losses greater than their original investments. Please consult your financial adviser as to the suitability of any investments.

Copyright 2022 Moomoo Inc. All rights Reserved.
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