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Would purchase a stock that does not pay a dividend

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Reference no: EM132764568

Many companies pay shareholders a regular dividend payment every quarter. For example, on April 24, 2012 the following announcements were made:

  1. Johnson and Johnson (JNJ) announced today that it will increase its dividend by 7%. This will give JNJ 50 consecutive years of dividend increases. The new annual dividend will be $2.44 per share and will help maintain the companies solid dividend yield.
  2. Exxon (XOM) announced yesterday that they will increase its quarterly dividend by 21% which will give the company a annual dividend of $2.28 per share and a dividend yield of 2.6%.
  3. Other companies, like Google, have never paid a dividend.

Problem 1: Would you purchase a stock that does not pay a dividend when there are many companies which make regular dividend payments to investors? Why else would you invest in a stock or equity security?

Reference no: EM132764568

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