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"Public corporations have no legal obligation to pay dividends to common shareholders, no matter how profitable they are or how much cash they have"

Does that mean we don't own part of company? If we own part of company then why we (shareholders) don't get dividend.Or does that mean a 10% shareholder also don't get dividend

3 Answers 3

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No. The definition of a shareholder is a partial owner of the company. Whether a dividend is paid has nothing to do with it.

Just like any company, the owners might decide they would rather re-invest the profits back into the company so it can grow instead of taking those profits as dividends. As a shareholder you have a say in whether they pay dividends, however, unless you own a ton of shares you are only one vote in thousands even hundreds of thousands of people.

A company that is trying to grow fast will often not pay dividends and use the money to make the value of the company grow. An established (some might say "boring") company that isn't expecting as much growth, but still needs to attract investors so they pay out some of the profits in dividends.

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  1. The Board of Directors decides whether or not to issue a dividend.
  2. Who are the Board of Directors? The people that the owners vote to to be their "proxy overseers" above the CEO and President.
  3. If you don't like the fact that you aren't getting a dividend, vote for a new slate of Directors who promise to issue a dividend.
  4. Practically, though, for a publicly traded company, you own just a tiny share of the company and will get out-voted.
  5. Thus, either "accept" capital gains, or sell your shares and buy into a company that does issue dividends.
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    To put a finer point on item 4: APPLE has 16.4 billion outstanding shares. In a fictional world where the US had direct election of the president and everyone got a vote, if you had 50 shares of Apple, your vote at the company meeting would have as much individual sway as your single vote in the national election.
    – Damila
    Jan 1 at 20:01
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There are many questions on this site about dividends or the lack of dividends.

If the company wants to use the profits to expand the business instead of paying dividends they can do so. They can also save the profits waiting for opportunities to invest in other businesses.

These decisions are made either by the board of directors, or the shareholders using their voting rights.

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