One of the more interesting discussions in dividend investing revolves around how a company should spend its earnings.
There are two options. First, companies can invest in themselves, growing their sales and giving them enough resources for planned expansions or acquisitions. Should management play its cards right, this can be a catalyst for massive growth. It can also spend its earnings on shareholders to share buybacks or dividends. This increases shareholder value and makes the company more attractive to long-term investors.
