Any excess profits not reinvested are paid as dividends to share holders. However, if you’re reinvesting that money from dividends into buying more shares then there’s no difference between the two. Think of it like this. If I’m a company and I have a dollar, I can either invest it in the company and make my value go up by a dollar or give my share holders a dollar. Of course, in the inverse situation, the share.holder can just sell a dollar worth of stock and the situation is the same.
So there really isn’t too much of a difference between the two.
But are they also required to do so?
Any excess profits not reinvested are paid as dividends to share holders. However, if you’re reinvesting that money from dividends into buying more shares then there’s no difference between the two. Think of it like this. If I’m a company and I have a dollar, I can either invest it in the company and make my value go up by a dollar or give my share holders a dollar. Of course, in the inverse situation, the share.holder can just sell a dollar worth of stock and the situation is the same.
So there really isn’t too much of a difference between the two.