Is it better for an investor to invest in ......?

Question

in a company that does NOT pay dividends as opposed to a company that DOES PAY dividends?

Any feedback is much appreciated .... :)

Why or why not ... ??
Thanks!

Answer 1

What kind of dividends? Cash, Stock ? I think my knowledge about it is raw but i will answer it to the best of my ability.
If you're a potential investor, you have to invest in a company that pays dividends. Of course, you have to get something from your investment in form of either cash or stock, whatever the board wishes to declare. If the company does not declare dividends on a particular year, dividends will be carried over to the next year until they have reached to a decision that they are going to release dividends supported that the company is really gaining profits otherwise they'll put it on hold.
Added:
Hey smarty, don't take my word for it. My answer was a bit far compared to the rest.

Answer 2

It depends on how long you want to hold the stock. If you are holding the stock for a short period of time, then the amount of dividends will probably be trivial. For short term stocks (less than a year), you are looking for rapid appreciation. For longer term stocks you have to look at the entire ROI (return on investment), both dividends and appreciation (if any). Because of the sluggish stock market lately, more investors are looking at stocks that return dividends. Younger companies take their extra capital and plow it back into building the company rather paying it out to their stockholders. There is much more to think about when evaluating stocks than just their amount of dividends.

Answer 3

Generally stocks that pay dividends are not growth stocks. In other words don't expect a dramatic increase in the stock price - on the other hand you do get a dividend.

Growth stocks don't usually offer dividends (or offer small ones), but are more likely to have more dramatic increase in their stock price over time.

Growth stocks probably have more risk built into them, whereas dividend stocks tend to be older, more solid companies (think blue chips). But that's not to say one is better than the other.

Generally if you have more time before you need the money (like you are 30 and investing for retirement) you have time to wait on growth stocks to really appreciate.

Another difference is the way they are taxed. Dividends are considered income and are taxed accordingly (currently 15% is the max you'll pay). Growth stocks, if they don't offer a dividend) are not taxed, unless you sell them for a profit.

Answer 4

Profitable companies usually pay dividends. If a company is not paying a dividend, it's probably because it's not profitting reliably. I'd highly recommend investing in dividend paying stocks.