Well, you bring up a point that I once pondered.Let's look at it from a basic accounting standpoint:Assets=37,000Liabilities: Accounts Payable=36,000 Dividends Payable=500Shareholders Equity=500Okay, now the company that reinvests dividends:Assets=37,000Liabilities: Accounts Payable=36,000Shareholders Equity=1,000I know that my illustration is ver rudimentary, and is flawed in logic possibly. Just look at it this way, if a company is not paying a dividend, they are reinvesting in the company giving a grater value to the company while not incurring the dividend payable liability.I hope that helps. Bottom line, it is a wash, you just end up not paying taxes yearly on the dividend.
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