All of the recent stock market volatility has stimulated an interest in dividend stocks. Many people are exploring how they can earn a stable income using dividend stocks, since they still pay out, even in a down stock market. Many dividend companies have solid fundamentals, and are cash rich enough that they can share some of their profits with others.
However, just because a company is rolling in cash doesn’t mean that it is sharing some of its good fortune with shareholders through dividends. Here are some of the most famous, cash-rich companies that hold back when it comes to paying dividends:
- MSI: Motorola Solutions, Inc. has plenty of cash from its ventures, but doesn’t usually pay much back to its shareholders in the form of dividends.
- EBAY: eBay Inc. is still going fairly strong, and it still has plenty of cash, even though it is famous for making acquisitions and mergers. However, the company doesn’t feel it necessary to share.
- MA & V: MasterCard and Visa, the credit card payment processing giants, have a solid business model (nearly everyone uses their branded credit cards and debit cards) and loads of cash, but are pretty stingy with the dividends.
- AAPL: Apple is, perhaps, the most famous of cash-rich companies that don’t pay dividends. The sheer amount of cash that Apple has would be enough to provide a generous one-time dividend for shareholders, or even set up a quarterly or annual dividend. (The company might need to offer a dividend if investors begin leaving if Apple doesn’t do as well without its visionary leader, Steve Jobs.)
These companies might do well to return some of their cash to shareholders. Even in these tough economic times, these are companies that tend to do reasonably well – and are likely to weather most market storms.
How Companies Can Benefit from Paying Dividends
One of the biggest ways that companies can benefit from paying dividends is by attracting investors. More investors means higher share prices. Indeed, dividend stocks usually do well, out-performing non-dividend paying stocks during tough economic times. This is because investors stay in because of the dividend payment, and new investors, looking for solid buys and perhaps a little income, are willing to make purchases.
A company doesn’t even have to offer a regular dividend to benefit from a short-term boost in share price. Can you imagine how excited investors would be if Apple announced that it was going to offer a special, one-time dividend? The rush to pile into Apple by the ex-dividend date would be massive.
You can probably think of several solid, cash-rich companies that you would like to see offer a dividend. And, perhaps it’s time for these companies to wake up and see the way things are going. Dividend stocks are in demand, and they are doing reasonably well. Some of these companies might do well to consider rewarding shareholders with some sort of dividend.