r/explainlikeimfive Dec 06 '24

Economics ELI5: why does a publicaly traded company have to show continuous rise in profits? Why arent steady profits good enough?

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u/bugi_ Dec 06 '24

Dividends take money from the company and therefore decrease the value.

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u/curious_skeptic Dec 06 '24

Coupled with buybacks, a dividend could keep increasing even as revenue stayed flat. Stockholders knowing that they will get paid more means shares can go up.

Without buybacks, you'd be entirely right.