Re: How Dividends Work?
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Dividends are also a concrete sign that the company is making money. If they're paying dividends, they're in good enough financial shape to be sending away cash, which is a good thing. Also, dividends, unlike earnings and everything else on financial statements, can't be fudged with accounting tricks.
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Not necessarily. There have been companys in the past have issued more stock and/or issued bonds and used the proceeds to cover dividends. Also I'd point out that GM continues to pay a dividend despite their financial and economic problems.
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