Hi

I am puzzled about dividends, here's why.

Microsoft (just one example) didnt pay any dividends to stock holders at all until some time in 2003, almost 30 years since the company was founded.

Therefore what was the motivator for anyone buying stock during that time?

If a company makes a profit but never pays dividends, then why does the stock price increase over time?

Am I making myself clear?

I just can't see why a stock would increase if the company never distributes any of its profit. I can see why I would buy stock if the price is rising over time (so I can sell it later) but I'm puzzled as to why it WOULD increase over time.

Can someone please explain this?

Thx

Microsoft built up sizeable cash assets during this period, which could still be allocated to investors - so Microsoft stock was still well valued on the grounds that the company was solvent, profitable, and had cash reserves enough to pay a big dividend.

I seem to recall when they did pay it, that single act caused a big blip on economic indicators for the month.