Explore BrainMass
Share

Explore BrainMass

    Are companies obligated to pay dividends on common stock?

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Are companies obligated to pay dividends on common stock? Explain.

    © BrainMass Inc. brainmass.com October 9, 2019, 11:07 pm ad1c9bdddf
    https://brainmass.com/business/accounting-for-corporations/companies-obligated-pay-dividends-common-stock-244931

    Solution Preview

    If obligated means required, the answer is no, although investors want and expect a return on their investment.

    There are two kinds of returns for investors: dividends and growth in the price of the stock. Certain types of companies will purposely ...

    Solution Summary

    The solution explains the two types of investment returns sought by investors in stock of corporations. It discusses dividend payments using a current stock market example for easier understanding.

    $2.19