Yes, if a company has stopped growing, then its valuation will go down in time (primarily due to inflation), but then giving dividends just hastens the decline. If a company's value is going down, it makes only short-term sense to give out money. It may just mean some unprofitable assets have to be sold off, or the company needs deeper restructuring.
If the company is profitable and its value is growing against inflation (slow growth), then it's worth having a share in it even if it's not paying dividends. (It's actually hard to find something solid that grows against inflation, in the long term).
>If the company's return on borrowed money is higher than the interest rate it pays on that borrowed money, paying down the loan would be a waste of money.
The company's 'returns' on paying dividends is actually negative, all other things equal.
>Now consider another scenario: rather than the shop opening up a new branch, what if the investors (i.e. the owners) want to invest in a different or new business, with potential for higher returns in the future?
If the investors really think they're not getting their money's worth (i.e. the separate assets are worth more or the management is bad), then it makes sense to initiate a takeover.
P.S. please downvote after you have heard a reply.
If the company is profitable and its value is growing against inflation (slow growth), then it's worth having a share in it even if it's not paying dividends. (It's actually hard to find something solid that grows against inflation, in the long term).
>If the company's return on borrowed money is higher than the interest rate it pays on that borrowed money, paying down the loan would be a waste of money.
The company's 'returns' on paying dividends is actually negative, all other things equal.
>Now consider another scenario: rather than the shop opening up a new branch, what if the investors (i.e. the owners) want to invest in a different or new business, with potential for higher returns in the future?
If the investors really think they're not getting their money's worth (i.e. the separate assets are worth more or the management is bad), then it makes sense to initiate a takeover.
P.S. please downvote after you have heard a reply.