Why Don't These Winning Stocks Pay Dividends?

The S&P 500 (SNPINDEX: ^GSPC ) has hundreds of dividend-paying companies within its ranks. But strangely enough, some of the largest, most successful companies in the S&P 500 don't pay dividends. Among them are four giants of American industry: Google (NASDAQ: GOOG ) , Berkshire Hathaway (NYSE: BRK-B ) , Amazon.com (NASDAQ: AMZN ) , and Gilead Sciences (NASDAQ: GILD ) . Why haven't these companies paid money back to their shareholders? Let's take a closer look.

Tech companies were slow to get on the dividend bandwagon, and both Google and Amazon have been holdouts for a long time. In the case of the online search giant, investors have believed it's inevitable that Google will eventually pay a dividend. Gilead is just one of many biotech stocks that don't pay dividends. For decades, Berkshire's Warren Buffett has resisted paying a dividend. Despite recognizing the wish among many of his shareholders to institute a payout, Buffett believes that Berkshire investors are better served when the company reinvests cash to generate higher returns than if Berkshire simply pays that money back to investors. Given the success of these four stocks, why are dividends such a big deal? There's one big reason: Dividend stocks can make you rich too.

Source: Motley Fool

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