Please explain: If you were to purchase a stock, would you be looking for one that paid high dividends or high capital gains?© BrainMass Inc. brainmass.com June 3, 2020, 9:14 pm ad1c9bdddf
If you were to purchase a stock, would you be looking for one that paid high dividends or high capital gains?
Firm's Ability to Pay Dividend depends on its funds requirements for growth, shareholders' desire and liquidity. A growth firm should set its dividend rate at a low level (because of its high needs for funds) and move towards its target slowly.
Practical considerations for payment of dividend are:
Financial Need of company, Shareholders Expectations, Closely/Widely Held Company, Constraints on Paying Dividends, Legal Restrictions, ...
This solution discusses considerations when purchasing stocks.