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

A. Yes, the payment of dividends indicates that a stock's value has increased.

B. No, the payment of dividends indicates that a company has earned profits.

C. Yes, the payment of dividends indicates that a company's assets have grown.

D. No, the payment of dividends indicates that a company can repay investors.

Question

Geography

Megan Clements

14 January, 20:00

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

A. Yes, the payment of dividends indicates that a stock's value has increased.

B. No, the payment of dividends indicates that a company has earned profits.

C. Yes, the payment of dividends indicates that a company's assets have grown.

D. No, the payment of dividends indicates that a company can repay investors.

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Answers (2)

Know the Answer?

Randall Gay · Answer 1

The answer is : B. No, the payment of dividends indicates that a company has earned profits. Dividend payment usually does not affect the fundamental value of a company's share price.

Cayden Contreras · Answer 2

The answer is: B. No, the payment of dividends indicates that a company has earned profits.

Company's stock value is influenced by many factors in the market, not only profit. In order to appreciate its value, here are the the least things that the company need to do:

1. Maintain the level of profit increase for a long period of time

2. Stay out of controversies that turn consumers away

3. Operate in a healthy and stable economy

4. Keep the amount of their debt at a low level.