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Originally Posted by jIM_Ohio
If a company drops it's dividend, it's a sign things will get worse.
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Uh, not necessarily.
In most cases, the best performing stocks will never pay dividends. That's because... they don't have to. There is already plenty of appeal in its growth. As an added bonus, not having to pay dividends often means more cash in the coffer for growth and innovation. Microsoft was a great example of this.
Of course, Microsoft has since matured, and in order to maintain its appeal, it has started paying dividends. And the more stable (and shaky) a company is, the more they would have to pay in dividends to keep its shareholders happy.
But unlike Microsoft, not every company has a war chest large enough to pay dividends AND maintain its growth and innovation.
So, if anything, the more a company pays in dividends, the more it is a sign that things will get worse.