No dividend was paid by Netflix to its shareholders this year or in previous years. Find out why and whether this stock can become a yield stock in the future.
Currently, Netflix stock does not allow its shareholders to collect a dividend in exchange for owning it. It is therefore not a yielding stock, but investors who choose to buy this stock do so primarily as part of a growth strategy and thus hope to record a future capital gain by reselling this stock at a higher price than that at which they bought it.
Historically and since its first listing, Netflix has never paid a dividend to shareholders.
Let's remember that Netflix is a company that was introduced on the stock market in 2002. However and until today, it has never paid a dividend to its shareholders.
The reason for this absence of dividend is not to be found in the revenues of this group which makes comfortable profits and even increases from year to year.
In fact, like other companies in the technology sector, Netflix makes many investments. Although it is not a start-up, the company has to renew itself constantly in order to face its competitors and the arrival of new adversaries on the market.
Netflix's objective is therefore not to reach its maturity phase too quickly and not to decrease its growth, which could benefit its competitors. Indeed, let's remember that the main competitors of Netflix have important financial means such as Amazon, Apple or Disney and operate platforms similar to Netflix's.
It is therefore logical for Netflix to exploit a large part of its profits and keep funds available in order to invest and offer its subscribers new products and additional services to keep them loyal.
That's the question on the minds of many investors interested in Netflix stock. At the time of its IPO in 2002, it was indeed normal for Netflix not to pay any dividend to its shareholders because the company was then in full development and encountered difficulties before finally returning to profits in 2010.
But today, Netflix is no longer in its infancy and has experienced strong growth over the past few years. It is therefore becoming increasingly difficult for this company to justify its lack of dividend. Indeed, the last financial results of the group are not incompatible with the payment of a dividend but Netflix justified this absence of remuneration with the increase in value of its share on the stock market.
However, with the arrival of new players on the market, who are particularly well established in various sectors of activity and who pay dividends to their shareholders, the risk for this group is that investors will sell their shares for them. It is therefore not impossible that Netflix will decide to pay a dividend to its shareholders soon.