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Stock Valuation And Dividends

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1. Stock Valuation: How does the value of a share of stock depend on dividends?
As stated in the text; a stock with no dividend may or may not have any value; if no
dividends are expected from a stock, not even in future, then stock will not have any value
provided that investors are rational and practically speaking such stock will hold no value and
investors will not be willing to invest in that stock. Investors would calculate future value and
present value of stock before making investment and expected dividends also considered when
we are calculated the present value of stock.
2. Dividend Policy: A substantial percentage of the companies listed on the NYSE and
NASDAQ don’t pay dividends, but investors are nonetheless willing to buy shares in
them. How is this possible, given your previous answer?
People invest in the stock because they expect dividend and well established companies pay
dividend each quarter to make the investors feel safe [Trendshare, (2016)]. It is also true that
many companies are not paying dividends but people are still willing to invest in those
companies. People tend to speculate based on their forecasts and financial analysis; a company
may not have been doing well right now or they may have expanded their facilities recently, or a
company may be willing to reinvest their profit and get better returns for stock holders in the
future [Trendshare, (2016)].
Reference
Trendshare, (2016). Why Do Some Companies Not Pay Dividends? Retrieved Aug 11, 2016
from: https://trendshare.org/how-to-invest/why-do-some-companies-not-pay-dividends

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1. Stock Valuation: How does the value of a share of stock depend on dividends? As stated in the text; a stock with no dividend may or may not have any value; if no dividends are expected from a stock, not even in future, then stock will not have any value provided that investors are rational and practically speaking such stock will hold no value and investors will not be willing to invest in that stock. Investors would calculate future value and present value of stock before making investment and expected dividends also considered when we are calculated the present value of stock. 2. Dividen ...
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