Does it matter whether or not firms pay dividends?
By looking at the level of the dividend yield of a company, an investor is in a position to make an appropriate investment decision. For example, if the dividend yield is low as compared to other firms in the same industry it can imply two things. First, its share price has increased since the market notes that the company has good prospects and that payment of dividend will not create any problem in the market. Secondly, it can mean that the company is in financial problem and that it is not