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An investor may choose to invest in a company without a dividend because the investor is looking to profit from the sale of this company's shares. They buy the stock at a low price and hope to sell it quickly at a higher price, and profiting from difference between these two prices (i.e. a capital gain).

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15y ago

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Would you ever pay out dividends when your firms annual net profit is negative?

No, paying out dividends when a firm's annual net profit is negative is generally not advisable. Dividends are typically distributed from profits, and negative earnings indicate financial difficulties. Distributing dividends in such situations could strain the company's cash flow and undermine its ability to invest in necessary operations or cover losses. It's more prudent to retain earnings to stabilize the business.


Why would a company choose to pay dividends?

A company may choose to pay dividends to reward shareholders for their investment, attract new investors, and demonstrate financial stability and confidence in the company's future performance.


How are Dividends are paid out of profits?

Yes. companies pay out dividends to its share holders from the profit they make out of their business. The more the profit the company makes the greater would be the dividends paid out to the shareholders.


Dividends are usually paid how many times a year?

This would depend on the company, but many pay 2 or 4 times a year.


Why would a corporation rather borrow money and pay interest than sell stock and then pay dividends?

Interest is tax deductible, so amounts paid lower the tax they would have otherwise paid. Dividends are paid with after tax earnings..there is no tax deduction for them. Of course, someone receiving interest pays tax on it at their ordinary income rate, and someone receiving dividends pays tax at the capital gain rate, which is lower.

Related Questions

Why would a company choose to pay dividends?

A company may choose to pay dividends to reward shareholders for their investment, attract new investors, and demonstrate financial stability and confidence in the company's future performance.


How are Dividends are paid out of profits?

Yes. companies pay out dividends to its share holders from the profit they make out of their business. The more the profit the company makes the greater would be the dividends paid out to the shareholders.


Why would someone invest in palladium?

Unless they had a usage (e.g. industrial) they would invest for speculation or for portfolio reasons.


Where would retained profit be used?

For distributing dividends, repaying company debts, etc.,


Would you advise someone to invest in a cash cow?

Why yes, yes i would.


What are some things that would be good to invest in?

You can buy bonds from the government or you invest in the stock market. Pick some specific stocks that you like and based on your risk level. Many stocks also pay dividends so you can make more money off of your stocks.


Dividends are usually paid how many times a year?

This would depend on the company, but many pay 2 or 4 times a year.


What is non-cumulative perference share?

non cumulative shares are those shares which do not get previouse dividends due to company's bad financial position. for example, if they were suppose to get dividend @10% last year, but could not get due to bad financial position of the company, and in the current year company gets stable and is willing to pay dividend, so it will pay only current year dividends and not last year dividends... if it was cumulative share company would pay last year and current year dividend.. conclusion: non cumulative share doesnot get previouse dividends and cumulative share gets all dividends (previouse+ current) when compnay restores its good financial position.


What is non cumulative perference share?

non cumulative shares are those shares which do not get previouse dividends due to company's bad financial position. for example, if they were suppose to get dividend @10% last year, but could not get due to bad financial position of the company, and in the current year company gets stable and is willing to pay dividend, so it will pay only current year dividends and not last year dividends... if it was cumulative share company would pay last year and current year dividend.. conclusion: non cumulative share doesnot get previouse dividends and cumulative share gets all dividends (previouse+ current) when compnay restores its good financial position.


Why would a corporation rather borrow money and pay interest than sell stock and then pay dividends?

Interest is tax deductible, so amounts paid lower the tax they would have otherwise paid. Dividends are paid with after tax earnings..there is no tax deduction for them. Of course, someone receiving interest pays tax on it at their ordinary income rate, and someone receiving dividends pays tax at the capital gain rate, which is lower.


Why Stock buybacks are similar to dividends from the company?

At one time capital gains were taxed at a lower rate than dividends. Stock buy backs would reduce the number of shares making the remaining shares worth more in theory. Thus a person could sell his shares back to the company for more money than if the company had paid a dividend. Today, that is no longer the case. Dividends are taxed at about the same level as capital gains. A stock buy back gives absolutely no advantage to a stockholder. It takes money that could be used for dividends and uses it for something else. When someone claims that the accounting rules of 15 years ago still apply, you should double check.


When would a private investment be considered?

A private investment would be considered when a person or company has assets they would like to invest privately. Generally a private investment would be made in a non-public company.