• chicken@lemmy.dbzer0.com
    link
    fedilink
    arrow-up
    18
    ·
    8 months ago

    you get a lot of publicly traded companies that are in the industry that have to show their investors growth—because why else does somebody own a share of someone’s stock if it’s not going to grow?

    I thought the way it was supposed to work was, a company starts out investing in its growth and during this period shareholders get gains from the price of the stock going up, and then when it has maxed out just switch to shoveling the profits into dividends instead? If the industry has stopped growing, I don’t see why there isn’t a path to acknowledging that to investors, what am I missing?

    • Cowbee [he/him]@lemmy.ml
      link
      fedilink
      arrow-up
      13
      ·
      8 months ago

      Growth is more valuable than dividends, and there’s always more room for growth in the eyes of investors.

      • chicken@lemmy.dbzer0.com
        link
        fedilink
        arrow-up
        1
        ·
        8 months ago

        Growth is more valuable than dividends

        Shouldn’t that depend on the dollar amounts? Why would $X of dividends be worse than $X of stock growth? And if growth just isn’t in the cards anymore, it would be in reality a worse bet as the companies pour resources into a black hole of false hope and self sabotage seeking something that isn’t actually going to happen.

        • Cowbee [he/him]@lemmy.ml
          link
          fedilink
          arrow-up
          2
          ·
          8 months ago

          Growth stocks rise more because they carry more risk than steady dividend payouts. In a perfect dividend world, dividends would match growth, but because there is inherent risk in growth stocks there is a larger upswing

          There are competing schools of thought in the investment world, and Growth has solidly beaten Dividend investing. Even better, going for a market-weighted global index fund is best.

        • LordWarfire@feddit.uk
          link
          fedilink
          English
          arrow-up
          2
          ·
          8 months ago

          You don’t pay tax on growth, you do on dividends. For large shareholders a high dividend can be a problem. Even for me, a very small time retail investor, I have to keep a balance of growth (like Apple) and dividend (I tend to use a dividend ETF so I can fairly reliably estimate my dividends) so I can avoid paying tax on the dividends.