Course: Financial Management Attach questions to discuss assignments Format required: APA All posts (initial and replies) must be substantive (at least 300 words), and each of your initial posts

Discussion Question:

Hello , the decision to pay or not pay dividends can be difficult. If a company pays dividends and a particular pays less than previous years, it could signal to investors that the company is not earning as much and is at high risk. Signals like this can cause investors to divest their holdings and place them somewhere else. Many tech companies do not pay dividends because shareholders can earn money on the capital gains from buying and selling stock. Apple for many years did not pay dividends here is the scenario:

Free cash flows are the cash flows available for distribution to all investors (stockholders and creditors) after paying expenses (including taxes) and making the necessary investments to support growth.  What do you think of Apple not paying dividends to investors and reinvesting their earnings into the company instead? In an article by Ro (2012) we learn that Apple has a high cashflow. "Some Apple (Links to an external site.) investors have been crying for Apple to initiate a dividend.  Recently, those cries only got louder after CEO Tim Cook (Links to an external site.) said he and the Apple c-suite have been in "active discussions" about what to do with company's mountain of cash (Links to an external site.)." (Ro, 2012).  What are the implications of their dividend policy amid high quantities of cash?

Note: Apply said it could invest shareholder earnings at a higher rate of return than the shareholders could invest for themselves; this is the reason Apple took a long time to pay dividends. What are your thoughts?

Reference:

Ro, S. (2012). Why Apple investors all need to stop whining about not getting a dividend. Business Insider. Retrieved from https://www.businessinsider.com/apple-investors-really-need-to-stop-whining-about-dividends-2012-3