If a Stock Doesn Pay Dividends, How Can It Be Worth Anything?
New investors often want to know: If a stock doesn’t pay dividends, isn’t buying it like participating in a Ponzi scheme because your return depends on what the next guy in line is willing to pay for your shares? That is a very good question and it’s important you understand the answer. To help you really get down into the details and understand non-dividend paying stocks, I created a story that will make this topic easy to grasp. Don’t forget, though, that dividends are a great source of return for shareholders, especially when combined with dollar cost averaging. Investing in non-dividend paying stocks should be the exception, not the rule. American Apple Orchards, Inc. Imagine that your father and your uncle decide that they want to start a farming business. They each contribute $150,000 of their savings to a new company, “America
