“I believe non dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.
Valuing stocks can be a marketing effort as it is with most stocks, or in some cases, the companies are positioned to generate profits, cash and return that cash to shareholders.”
This is good insight. If the company is not returning cash to their shareholders you have to ask yourself what they are doing with it.
They may buy back their stock – which is good. They may buy another company – which could be good. They may use it for research and development or upgrading capital assets – which could be good.
They could also squander it by making bad choices. They could sit on it and do nothing or they could spend it on lavish parties for the staff. All of which are bad.
Bottom line: Companies that pay dividends feel an added sense of pressure to perform. They must return that money to their owners on a regular basis or they risk losing value. Non dividend stocks are valued at the pleasure of the market – remember irrational exuberance?