Exactly. So, give breaks to companies that cannot pay dividends, because the ones that do are the ones who are obviously signaling that they are fine.
This isn't some slam against paying dividends, though. I do agree with you. I am fascinated at companies like Snapchat whose shares command no voting power and do not pay a dividend.
However, as far as signals go, "here, we are so well capitalized that we think you can invest this money better than we can" is pretty strongly saying your company is in good financial shape.
This isn't some slam against paying dividends, though. I do agree with you. I am fascinated at companies like Snapchat whose shares command no voting power and do not pay a dividend.
However, as far as signals go, "here, we are so well capitalized that we think you can invest this money better than we can" is pretty strongly saying your company is in good financial shape.