Some folks believe if a fast-growing company pays out a dividend, it will signal to investors that the stock is no longer a growth stock, and it will lose its growth premium. Arguably, however, some fast-growing companies simply generate too much cash to hoard it all -- companies like Google .
What should Google do with its idle cash? Fool contributor Daniel Sparks thinks Google should return some of it to shareholders. He explains that some businesses simply deserve a premium valuation because they are excellent businesses. Additionally, he gives investors three concrete reasons why Google should pay a dividend.
As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other web companies, it's also struggling to adapt to an increasingly mobile world. Despite gaining an enviable lead with its Android operating system, the market isn't sold. That's why it's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's new premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource.
The article 3 Reasons Google Should Pay a Dividend originally appeared on Fool.com.Fool contributor Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.