If a company pays dividends on a stock, does that mean that the stock has appreciated in value? Why or why not?

Question

Business

Jaquan Gonzalez

6 January, 11:01

If a company pays dividends on a stock, does that mean that the stock has appreciated in value? Why or why not?

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Answers (1)

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Mckenna · Answer 1

No, the payment of dividends shows that a company has made profits.

Explanation:

A dividend is a payout to its owners by a company, usually as income transfer. If a company earns a surplus or waste, it can spend the income (known as the withheld earnings) in a company and pay part of its gain to investors as a dividend.

Dividend only stated that during the last financial time span the company had only earned profit.

If many shareholders see it as a perfect chance to make profit, a stock would be worthwhile. Some other factors have influenced a stock so that it is valued, and dividends are only a small part.

For example, a great cash flow needs to be provided; the company needs to retain a good public reputation, a high debt-to-debt ratio, etc.