Why do stocks have value?

The fundamental reason for an asset to have value is in its ability to produce future cash returns to its shareholders, and its price movement also reflects the change of this ability. For example, W. W. Grainger has an incredible history of 54 years of increasing dividends since its listing on the American Stock Exchange in 1971, and its stock price has increased several hundred times. Another example is Freddie Mac, which only pays dividends to senior preferred shares owned by the Department of Treasury since FHFA took it into conservatorship in 2008. Despite earning nearly $12 billion net income last year, it pays no dividend to its common shareholders, as a result, its common share was trading about 0.4x its net income. When the new administration announced its intention to privatize Freddie Mac, its common share price went up 5x, reflecting market’s expectation on the company’s ability to distribute dividends to common shareholders.

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informational purposes only. It should not be considered as financial, legal, or
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A 30% ROE Compounder Insurer Trading at Book Value

The Insurer Below Book, Buying Itself Back, Ignored by Wall Street

Why is S&P 500 hard to beat?

69 Pence on the Pound for a Book That Compounds at 18.5%