Lux Investing

Why do some investors invest primarily in stocks that pay notable dividends, but others minimal or no dividend

I am trying to review and determine that implications, positive and negative, of investing in dividend paying stock versus stocks paying minimal or no dividends

Public Comments

1. Some people invest in dividend paying stocks because they are looking for current regular income. A good example might be someone that's retired and needs the dividend income for living expenses. Stocks that pay little or no dividends are using all of their profits to reinvest in the business. If it's a good company, that means the company will likely grow faster than it would if it was using a lot of its profits to pay dividends and the price of the stock will go up more. The people that buy that type of stock are those that do not need current income but are looking for an investment that will grow in value.
2. Investors investing in dividend yielding stocks are rather risk averse.Now even in case of a fall in the market they still have the dividend income to fall back upon. But a large dividend paying company after paying dividends has lesser funds left to plough back into their business which may impact their growth However other investors seek to invest in companies paying less dividend due to higher chances of growth due to higher ploughing back of funds in the business.