https://www.thebalance.com/why-do-companies-pay-dividends-5185975
Part of link..
Why Do Companies Pay Dividends?
Dividends are one of two primary ways that investors earn money through stock investing; the other being
capital gains. And while dividends can be enticing to investors, not all companies pay them. Let’s discuss why companies pay dividends, as well as a couple of reasons why a company might not.
Sharing Profits With Investors
Simply put, dividends are a way for companies to share their profits with investors. Companies can use dividends to reward investors and entice them to stick around. But for a company to share profits with investors, it must actually have profits to share. As a result, dividends are most common from well-established companies that generate consistent revenue. Stocks of such companies are usually known as income stocks and pay regular dividends.
Why Companies Don’t Pay Dividends
So, if dividends help to attract and maintain investors, why don’t all companies pay them? While there are solid reasons that companies choose to pay dividends, there are also good reasons why some don’t.
First, when companies pass their profits on to the shareholders, they aren’t reinvesting them back into the company. And ultimately, those reinvestments can help the company to grow, thereby increasing the stock price.
Dividends are less common among startups and other growing companies that must
reinvest in the company to grow. These stocks, known as growth stocks, are often considered a good trade-off for investors because they expect significant capital gains.
=====================================================================
For me Dividends are a great way to invest in good or great companies. They keep paying during good or bad times. During the down market we are in you do not need to sell stocks that are down and you can wait for the market to re-bond. No need to sell stocks were you have big gains and pay income taxes on the gains.
