Stable companies such as those dealing with commodities like generation of electricity(e.g General Electric), manufacturing of soda(e.g Coca Cola) and hypermarkets(e.g Walmart) which sell household products are some example of companies that tend to give high dividend payout. These companies are considered "stable" because you do not expect the companies to channel a lot of profits to innovation or researching how to grow the business further. U.S listed companies that tend to consistently give out dividends are also known as the dividend aristocrats.
Companies that tend not to give dividends or give very little dividends are high growth companies, especially tech companies. This is because such industries require a lot of research and development to be on the cutting edge of innovation. In doing so, these companies also experience tremendous growth and is reflected in the bigger appreciation in the stock price as compared to dividend aristocrats.
In short, investing in dividend aristocrats would be akin to dividend investing where dividends form the bulk of potential gains while investing in growth companies is akin to value investing where your priority is on capital gains.
Once you understand this, you will understand the motive of a company to give or not give out dividends. Because not all companies automatically give out dividends when they are profitable. Some will reinvest profits for even larger growth going forward.
See if constituents of CQQQ ETF & JD stock falls into which category and if it aligns with your investment thesis. Then you will have your answer!
Stable companies such as those dealing with commodities like generation of electricity(e.g General Electric), manufacturing of soda(e.g Coca Cola) and hypermarkets(e.g Walmart) which sell household products are some example of companies that tend to give high dividend payout. These companies are considered "stable" because you do not expect the companies to channel a lot of profits to innovation or researching how to grow the business further. U.S listed companies that tend to consistently give out dividends are also known as the dividend aristocrats.
Companies that tend not to give dividends or give very little dividends are high growth companies, especially tech companies. This is because such industries require a lot of research and development to be on the cutting edge of innovation. In doing so, these companies also experience tremendous growth and is reflected in the bigger appreciation in the stock price as compared to dividend aristocrats.
In short, investing in dividend aristocrats would be akin to dividend investing where dividends form the bulk of potential gains while investing in growth companies is akin to value investing where your priority is on capital gains.
Once you understand this, you will understand the motive of a company to give or not give out dividends. Because not all companies automatically give out dividends when they are profitable. Some will reinvest profits for even larger growth going forward.
See if constituents of CQQQ ETF & JD stock falls into which category and if it aligns with your investment thesis. Then you will have your answer!