Question

If a company pays dividends on a stock, does that mean that the stock has appreciated in value? Why or why not?

Answer 1

The answer is: B.No, the payment of dividends indicates that a company has earned profits.

Company's stock value is influenced by many factors in the market, not only profit. In order to appreciate its value, here are the the least things that the company need to do:

1. Maintain the level of profit increase for a long period of time

2. Stay out of controversies that turn consumers away

3. Operate in a healthy and stable economy

4. Keep the amount of their debt at a low level.

Answer 2

The answer is : B.  No, the payment of dividends indicates that a company has earned profits.  Dividend payment usually does not affect the fundamental value of a company’s share price.