Why do a majority of publicly traded companies not pay dividends? I've noticed before that for many companies by identifier (ISIN, SEDOL, CUSIP, take your pick) that there are no dividend histories.
The only example that I know the reason why is Amazon. [If you buy Amazon stock you either 1) expect dividends at some later stage or 2) plan on selling the stock for a higher price.]
Some companies 'reinvest' profits in their operations and don't pay dividends.
Others avoid dividends, as dividends are profits that are taxed twice. (Once for corporate income taxes, and again for individual income taxes.)
Selling the stock for a higher price has opportunity for favorable tax treatment at the lower long-term capital gains vs dividends taxes as regular income.
> Selling the stock for a higher price has opportunity for favorable tax treatment at the lower long-term capital gains vs dividends taxes as regular income.
Dividends are generally taxed at the long-term capital gains rate, not as ordinary income.
This makes sense to me for private or public companies where the owners are also employees or otherwise benefit. It doesn't necessarily make sense for me if you are a very small stakeholder.
The only example that I know the reason why is Amazon. [If you buy Amazon stock you either 1) expect dividends at some later stage or 2) plan on selling the stock for a higher price.]