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Let's assume theoretically that a company will never ever pay dividends. Is there any point to owning its stock? Eventually after a thousand years it will either grow to an extremely large size or it will go bankrupt (but most likely the latter). In either case owning the stock is pointless.

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  • @HartCO Not at all relevant to this question Jul 18, 2023 at 23:13
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    Seems relevant to me, but perhaps an answer on this other similar question will be more helpful: money.stackexchange.com/questions/51976/…
    – Hart CO
    Jul 18, 2023 at 23:35
  • Dividends are typically excess cash after funding operational and strategic budget needs. Mature companies are more likely to declare. Newer companies are more likely to have funding requirements for expansion/growth. $ put towards successful expansion may raise the share price due to more cash or assets or just better market sentiment. It might get bought out by a company that does have dividends. (None of this may happen of course - I am just giving examples). You can sell out at any time and it can still be a profitable transaction. It just depends on your risk appetite and timeline. Jul 19, 2023 at 13:22
  • @HartCO The problem is, if the funds never ever get disbursed to the owners, then there's no point at all to owning the company. Jul 19, 2023 at 20:00

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Sure, if you expect the share price to increase, so that you can sell it for a profit.

For the modern retail investor, that’s the primary purpose for buying shares of stock.

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  • Why would the sharre price increase if no dividend will ever be paid Jul 18, 2023 at 23:14
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    'Why would the share price increase if no dividend will ever be paid' Because of a belief that company is making money and will continue to make money. Dividends aren't the only way for shareholders to recapture their investment. Somebody might want to buy the shareholders out and take the company private for example (as just happened with Twitter, where the shareholders got an awesome deal because Musk offered far more than the company was rationally worth). Jul 18, 2023 at 23:28
  • @JobHunter69 cash is an asset, right? Well, more cash means more assets, and that makes the company more valuable. which increases the share price. The company can also use that cash to buy other companies which make it even more money.
    – RonJohn
    Jul 18, 2023 at 23:28
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    Well, for the most common type of modern retail investor... and forced upon the rest of us because those folks have demanded share price growth at the expense of dividends. Personally I think that causes CEOs to optimize for the wrong things, favoring short-term over long-term, but I have to work with the market as it is, rather than as I would like it to be.
    – keshlam
    Jul 19, 2023 at 2:31

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