New investors often wonder why companies pay dividends to investors. Given that not all companies are in a position to pay dividends – and even those that can pay dividends sometimes do not – why should a company pay dividends to investors?
This is a very good question.
In fact, dividends are a very “old school” part of any stock investment. A long time ago, most companies paid dividends to investors. That’s the very reason that anyone would ever consider buying a stock that pays dividends. Investors wanted access to the cash flow that a company generated and would naturally seek out the safest dividend paying stocks.
A New Type of Investing
In this “post-dividend” world, investors often buy shares of stock to sell them after a capital gain has been realized. That is to sa
