Why U.S. Companies Continue to Pay Dividends

by Douglas J. Skinner

Much has been made of Apple Inc. (AAPL)’s recent decision to begin paying regular dividends, given the company’s large free cash flow (about $1 billion a week) and cash balance (close to $100 billion).

Yet, according to finance theory, stock-market investors should be indifferent to whether they receive their returns as cash dividends or capital gains…

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