UGBA paper 3

UGBA paper 3 - Pooja Shah 22179262/Sec 115 When investors...

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Pooja Shah 22179262/Sec 115 When investors are choosing stocks, dividends are one of many factors that are considered. Dividends have been a point of debate amongst investors and corporations for decades. Whether an investor should invest in a dividend paying stock or not depends on his financial situation and time he has to recover from any potential losses. Similarly, whether a corporation should provide dividends should depend on potential growth opportunities and the industry in which they belong in. . Investors who are looking for consistent income and cannot afford capital losses traditionally prefer dividend-paying stocks. Dividends provide stable income, reduce risk and contribute to a stock’s long-term cash return. Investors may also choose to invest in dividend paying stocks because they are not generally associated with companies that are in financial trouble. Retirees, who are traditionally in low tax brackets as a result of no longer being in the workforce, tend to prefer dividend paying stocks. Retirees like the stability of having regular income. Age plays a large role in this; because they are older, retirees have less time to recover from financial losses. Retirees are less likely to take risks (some may still remember the great depression), and traditionally are in a position where they cannot afford to lose money. Retirees
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This note was uploaded on 04/13/2011 for the course UGBA 10 taught by Professor Xuanmingsu during the Spring '08 term at Berkeley.

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UGBA paper 3 - Pooja Shah 22179262/Sec 115 When investors...

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