Quote from nitro:
To me, the only thing that matters as an investor is the dividend because ultimately, unless I work for AMZN, it is the only tangible way I can profit from AMZN doing well. And yet, investors bid up the stock of AMZN as if it was money they were makingPeople say, dividends are double taxed, blah blah blah. That's why companies don't pay more dividends. Well, yeah, but it is real!
I must be missing something.
This is the reason that secondary markets exist. If owning shares generated no cashflow, if there was no possible way one could ever sell the shares, and if it was absolutely certain that this situation would continue forever, then you would be correct and the value of those shares would indeed be zero.
Of course this is not remotely the case: companies may at any time begin paying a dividend, or raise it etc. and this is incorporated into the market's valuation. Likewise, if a strong-performing company were significantly and obviously undervalued by the market merely because it is not paying a dividend, then Warren Buffet could swoop in, buy the whole company, and immediately reap a massive windfall profit with essentially zero risk or effort. After a few rounds of this, Joe Public would catch on and front-run Warren (bid up the price of the stock) until all windfall-profit opportunities were eliminated. There's no Ponzi scheme here, just basic economics.
It's also worthwhile to consider a portfolio consisting entirely of dividend-paying stocks. You are paid cash; the cash can either sit in your account as cash and earn <1%, or you can reinvest it back into the shares. If you do the latter then there is no practical difference whether the shares paid you a dividend or not; in either case your position in stock XYZ is worth more than it was yesterday, and you can (subject to liquidity) immediately and at any time convert this position into cash.