I've had this discussion a lot with friends. It is simalar to this question: If a stock doesn't pay dividends, then why is the stock worth anything?

...But it is actually not the same. Most answers still talk about the company reinvesting now, and eventual payout in a (far) future. A really good reason for a stock to have value.

But what if a company would state they will never pay out any dividends ever? To make the case simple, let's assume the stocks also don't have voting rights and the rule is defined in the company constitution.

I notice that a lot of people still think the stock has value because the company itself can grow. My personal feeling is that the only thing is left is a ponzi scheme.

What's the truth?

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    I know you say this isn't a duplicate question, but it really is - read the answers there; value comes from either future dividends or future liquidation of the company [shareholders get the net remaining assets]. In a country with proper financial protections, there are laws to prevent for-profit corporations from 'going off the rails' and not providing any value to shareholders, even those without votes. Shareholders still own the company, regardless of anything else. Commented Mar 1, 2018 at 13:39
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    Google has not paid any dividends and the stock has done OK.
    – paparazzo
    Commented Mar 1, 2018 at 14:09
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    @Grade'Eh'Bacon This is not a duplicate question. The other question deals with a stock that IS not paying dividends. This question deals with a stock that WILL not pay dividends. Completely different situation. The answers to the other question give future dividends as the main source of stock value. The top-voted answer clearly gives this as the ultimate source of value, with all other value coming from how it can lead to this. Commented Mar 1, 2018 at 17:10
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    @Acccumulation It's a duplicate question with the single additional acknowledgment that even if a corporation says it "will never" pay dividends, shareholders [who own the very shares we are discussing] can ultimately elect a board in the future that will allow future dividends, and that there are laws to prevent majority shareholders from acting in a way that prevents minority shareholders from getting value. Combined, this means that "we will not pay dividends" = "we will not pay dividends until the shareholders believe our growth phase is done and we can afford it". Commented Mar 1, 2018 at 17:41
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    See also What would a stock be worth if dividends did not exist? Commented Mar 1, 2018 at 18:03

1 Answer 1


No and yes. :)

You might think that a company that has vowed to never pay dividends (profit) to their shareholders is a worthless investment. I even hinted as much in another answer on a question about dividends. However, this still doesn’t tell the whole story, because even if a company doesn’t pay dividends now, things might change in the future, in one way or another.

The company may decide in the future that it may start paying dividends. But even if it doesn’t start (or at least doesn’t for the foreseeable future), the shares still represent ownership in the assets of a company.

A company is made up of assets, intellectual property, and people, and all of those things have value. Those things may be sold in the future, and I, as a stockholder, receive a share of those proceeds. The way this works can take many forms. If another company takes over (buys) my company, I may receive cash or new shares in the new company. Or, if assets are sold, my company will have more cash reserves, which I am a partial owner of. Ultimately, if the company closes down, I am entitled to a share of the net proceeds of the final sale (after the debts are paid).

Let’s look at a couple of examples. Warren Buffett famously doesn’t pay dividends for his Berkshire Hathaway company, instead continuing to reinvest the profits in the company. But the shares are far from inherently worthless. Berkshire owns many profitable assets and makes lots of money. Even if Buffett never pays a dividend, his successor might. If he decides one day to close up shop and sell off the assets, there will be cash going to the shareholders.

A contrasting example is the Green Bay Packers. The Packers are a non-profit, community owned football team (unique in American major league sports). At several times in the Packers history, they have sold shares of stock to the community. However, as a non-profit, they will never distribute any dividends to the shareholders. Bylaws stipulate that shares cannot be resold (except back to the team), and any proceeds resulting from the sale of the team must be donated to charity. So, although shareholders do get some voting rights, the stock does not represent any actual equity value in the team. The stock certificate really is little more than a worthless piece of paper, although many sports fans in Wisconsin prefer to think of it as “priceless.”

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    Ponzi scheme is a devalued term, I know. Since OP mentioned it, it might be worth noting this is pretty much the opposite of a Ponzi, which is paying out dividends without underlying growth,
    – richardb
    Commented Mar 1, 2018 at 12:56

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