Growth Stocks
Stocks that do not pay a dividend are often thought of as growth stocks. There are two primary ways to make money by investing in common stocks. First and foremost is capital appreciation (or depreciation) that is earned by buying a stock at a lower price and then eventually selling it at a higher price. Second is from dividend income. A dividend paying stock pays its shareholders a portion of its earnings to them in the form of dividend income. Dividend paying stocks are generally considered safer than non-dividend paying stocks because the investors are getting your return of and on their capital without selling the stock.
On the other hand, just because a company does not pay a dividend does not automatically make it a growth stock. The ability of the business to grow hopefully at above-average rates is what truly defines a growth stock. Additionally, very young companies will start out needing all the capital they can get their hands on to grow their businesses. Therefore, it is not uncommon that young companies will not pay a dividend. But to repeat, that does not automatically mean that they will grow.
In this part 2 subscriber request video, I will cover 26 stocks, the majority of which do not pay any dividend with remainder only paying a very modest dividend. These are stocks that subscribers asked to cover and they are not necessarily recommendations. On the other hand, there are a few in the group that I do recommend for the prudent investor seeking long-term total return.
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Disclosure: Long GOOGL at the time of writing.
Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.