Another Beginning of the Whiteaura

I am really curious why do people like dividend that they get from shares? It is actually the company taking your money and giving a bit back to you and people think that they earn the money. For example, a share cost $5 and it gives you dividend of $0.50. So on the day of the dividend, the price of the shares become $4.50 ($5-0.50). Dividend is not earned. It is your own money.

It's the same as u give me $1000 and I give u back $50 every month and deduct it from the account.

People may argue that at least for stock, it goes up, and of course down. If money in bank, it earns little interest. Well, with or without dividend, the stock still goes up and down the same way. So it doesn't make much difference. Perhaps that is why really good stocks do not give out dividends...

posted by Whiteaura II @ 8:32 PM