Shareholders aren't just seeing their stock prices swell, they are getting paid too. The dividend, its importance demoted over the past couple of decades by the tech boom, is having a moment again thanks in part to the same companies that made it passé.They want to be perceived as growth engines
The former fledglings are now apex predators, seasoned with decades of experience balancing new investments with their core business, which happens to be expanding to virtually every domain of life. Shareholder payouts, even modest ones from the tech companies, also grant them entry into funds that require a dividend. They are broadening their pool of investors, drawing from portfolios that seek steady income from dividends and people who simply want to see the "number go up" on their brokerage accounts.
"If they keep the money internally, there is a tendency to have waste. By paying it out, it instills discipline," said Jennifer Koski, professor of finance at the Foster School of Business at the University of Washington, who has been teaching dividend cases for the Big Tech companies since before Microsoft stock is looking way too cheap for long-term investors looking to grow their wealth in a TFSA or elsewhere.
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