[my50cents]

The simple answer is that if a stock is expected to never pay any dividends, it's intrinsic value is zero.

Note that from shareholders' perspective, paying dividends is economically equivalent to share buyback, plus some tax considerations, so there are exceptions.

[hiq]

> The simple answer is that if a stock is expected to never pay any dividends, it's intrinsic value is zero.

Which is obviously wrong, right? Any company that has liquid assets (and no debt) is at least worth the selling value of these assets, even if it doesn't pay dividends. So I'm not sure your model helps here.

[csmiller]

I think in that case you would expect the company to return value to shareholders when liquidating it’s assets.

[hiq]

Exactly, so it doesn't have a value of 0 for these shareholders.