what if a company pays out no dividends versus company that does pay dividends?

Answer 1

It tends to show the stage in the lifecycle of a business, and what they feel they can afford to pay out vs invest in R&D etc. Startups like to reinvest cash in the business, and as startups they tend to attract speculative investors who are looking for bigger returns and willing to accept more risk.

Investors who want dividends are looking for lower risks and some income from their investment. There is room for both, but the dividend needs to be affordable to the company, which generally means they are in a phase where they are in a mature industry with a good market share and don't need to make larger R&D investments.

The tax position of investors also comes into play as dividends can be taxable if you take them as a payment instead of repurchasing more stock. So paying a dividend moves you away from investors who are concerned about taxable income and don't want to reinvest in the company.

Answer 2

Some companies pay out dividends, others want to reinvest the money in the business. High Tech companies, for instance, rarely pay dividends.

Answer 3

You evaluate the two companies the same, taking into account that instead of the dividend payer using its money to grow the company its using money to pay shareholders.

This is unless the dividends paid are so substantial, they exceed the % paid by bonds, then you evaluate it based on the sustainability of the dividend vs the safety of a bond.

Answer 4

What is your question? Some do, some don't, and the amount of dividend if they do pay one varies a lot from stock to stock. When evaluating a stock, you should take into account any dividends that are paid out, not just growth potential.

Answer 5

If you reinvest the dividends it's usually
a better deal. Really depends on the company
though.