Dividends Provide A Return Bonus – Seeking Alpha
c Provide A Return Bonus – Seeking Alpha: With all things being equal, dividend paying common stocks provide their shareholders a return bonus, or what some might like to call a kicker, over an equivalent common stock that pays no dividend. Many investors do not see it this way, as they tend to think of the dividend providing them their return. However, the stock market capitalizes earnings whether a company pays a dividend or not. Moreover, we contend that the market will value a given company’s earnings based on their past and future prospects for growth, again, regardless of whether a dividend is paid or not.