Question

Belgacom pays out big dividends. Should its share price rise faster or slower than the share price of Google which doesn’t pay out any dividends? Why? Would it be better to have Belgacom stock options or Google stock options? Why?

Answer 1

Yes, the share price of Belgacom should rise faster that that of Google because it pays out big dividends which attracts higher demand and proves that the company is generating more profit.

Step-by-step explanation:

When a corporation earns a profit or surplus, it is able to pay a proportion of the profit as a dividend to shareholders.

A company like Belgacom that pays out big dividends is a stable company with good credits. This incentive attracts more investors who see prospects for profits in the future.

More investors suggest increase in demand which will ultimately hike the share price according to the total amount of shares available.

The reason Google does not currently pay a dividend is that it wishes to continue its expansion into new ventures and would rather reinvest those profits back into the business.

The Belgacom option is preferable if you are an investor while the Google option is a better option for business owners.

Answer 2

Yes Belgacom share price should rise faster than google because Companies that pay dividends are seen as financially stable and they are popular among investors.

Step-by-step explanation:

Dividends are issued from a companies retained earnings. therefore only companies that are profitable in a big way can issue dividends consistently.

Companies that offer dividends consistently are percieved by investors as financially stable companies. and they become attractive to investors.

When more investors buy stocks because of the dividend Belgacom pays, the stock prices increases.

Paying of dividend is a great way for a company to foster goodwill among shareholders, drive stock and also communicate financial stability. Dividends can be in form shares of stock, property or cash payments.

Therefore with the above points i have mentioned, it would be better to have Belgacom stock options.