[yetanotherphd]

>I only need to point out the many companies that don't pay dividends and yet are widely accepted as investments.

Your logical error is in assuming that if a company that pays no dividends now is considered a good investment, then that must mean that investors don't care if that company never pays dividends. On the contrary, investors don't care if Google pays dividends now, because every dollar Google doesn't pay as a dividend gets reinvested in the company, or at least kept as cash, which enables them to pay more dividends in the future.

If Google simply kept that money forever, that would make it into some weird ponzi scheme that the world has never seen before (and we would have to wait until the end of time to find out). Back in the real world, companies typically do, as your yourself imply, eventually stop growing and start paying dividends.

>you have no idea to whom you are speaking, how I made my fortune, and you are certainly not in a position to lecture anyone about equities.

No one gives a shit about your fortune. I'm done with this, but next time try reading what you are replying to carefully, instead of just blasting out facts.

[lutusp]

> Your logical error is in assuming that if a company that pays no dividends now is considered a good investment, then that must mean that investors don't care if that company never pays dividends.

That is not a logical error, it is an uncontroversial fact. In point of fact, investors DO NOT CARE whether a company pays dividends, as long as their capital grows. Do you really think people who invest in Berkshire Hathaway are stupid or misguided? And will you people PLEASE do some reading and stop arguing from a position of ignorance?

> ... investors don't care if Google pays dividends now ...

That's right, and investors also don't care whether Berkshire Hathaway never pays dividends, because it's a very attractive investment, and it has never paid a dividend. If Google's growth curve should flatten, they'll have to pay a dividend. But your claim was that a stock that didn't pay dividends was worthless. It's embarrassingly false.

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Link: http://seekingalpha.com/article/1939371-no-dividend-stocks-c...

Quote: "Having delivered an average of one-third of stock returns since, (it was more than 50% in the '70s and 14% for the '90s) the case for dividends is clear. But there is no free lunch here. In periods of economic and market growth, dividend payers typically trail the performance of non-payers. Like now. According to S&P Dow Jones Indices, for the 12 months through November dividend payers in the S&P 500 delivered a 39.6% total return. No need to apologize for that. But the non-dividend payers clocked in with a 46.4% total return.

Ranking the entire S&P 500 by 12-month price gains, seven of the top 10 are dividend holdouts, led by Netflix (NFLX) which has quadrupled in price this year. The others: Micron Technology (MU), E*TRADE (ETFC). Genworth Financial (GNW), Yahoo! Inc. (YHOO), Celgene (CELG) and Boston Scientific (BSX), all of which have at least doubled in price over the past 12 months."

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Which part of this is in any way confusing?

> I'm done with this,

I'll say you are. But your ignorance remains in full bloom.

> but next time try reading what you are replying to carefully, instead of just blasting out facts.

"Don't confuse me with the facts when I'm on a rant." Sadly noted.

[Punoxysm]

If Larry Page, Sergey Brin and Eric Schmidt announced tomorrow that they would do everything in their power to prevent GOOG from EVER paying dividends, buying back stock, or selling to another company, then that would be catastrophic for the share price, correct? This is a step beyond simply being disinterested in dividends and buybacks in the near term, but you seem to be confusing the two.

Anyone who purchased shares at that point would be doing so because of one of the following 1) They believe that Page, Brin and Schmidt will change their minds 2) They believe that control will be wrested away from Page, Brin and Schmidt by more buyback/dividend friendly management 3) They believe that other people will still buy for reasons 1,2, or 3. This is classic Keynes Beauty Contest investing.

GOOG could still grow its revenues, but if it is guaranteed to never pay a dividend or buy back stock (Berkshire Hathaway doesn't pay dividends but Buffett has said he would definitely pursue share buybacks under certain conditions) or sell its assets, then there is no way to get cash out of GOOG except by trading with other beauty contest investors. The only thing left to anchor GOOG stock value to Google the company is the possibility of bankruptcy.

So yetanotherphd is 100% correct. It's not impossible for people to trade as if there's no connection between a company's future dividends/buybacks/asset sales and its stock price. But that's how you end up buying tulip bulbs for their weight in gold.

[vidarh]

The quote you give is irrelevant. One would expect cash-rich dividend holdouts to outperform dividend payers on the basis that dividend holdouts are often companies whose shareholders expect, often based on past performance, will deliver better than market returns with any cash they're allowed by shareholders to keep.

At the same time, dividend payers are valued on the basis that they have distributed part of the assets of the company. Looking at the share price on its own is fairly uninteresting, as that does not take into account the total value to shareholders. If you want to look at total value to shareholders, take the share price and assume that every dollar paid in dividends is immediately re-invested in more shares in the company. Once you do that, companies that pay dividends perform substantially better than if you look at the share price alone.

[j_camarena]

In theory they must "pay dividends", thats any tine except for infinite, otherwise stocks would be worthless. Its not that hard to get it.

Its like "ideal systems" in physics, they jjdt exist in theory but pretty much are fundamental,