Could Netflix Eventually Become an Excellent Dividend Stock?
Investing in dividend stocks can be an excellent way to build wealth over time. It can also provide a recurring income during retirement. Indeed, there are several benefits to investing in dividend stocks, but one downside is excluding top stocks that have not yet started to pay a dividend.
Typically, when businesses have more growth opportunities than they have cash, they reinvest any money the business generates into growth areas. Eventually, cash from operations exceeds growth opportunities and the funds needed to sustain the business for successful companies. At that time, a company looks to return capital to shareholders.
Netflix (NASDAQ: NFLX) is still in the growth phase. It is spending nearly all the cash the business generates on growth opportunities, mainly in creating content. Let's consider if Netflix can eventually become an excellent dividend stock.
Source Fool.com
