1. Why people invest in stocks that doesn't pay any dividend?

2. Why sometimes company retained half of their earnings rather than distribute all of them?

thanks!

1. Because dividend is not the only thing you can earn from buying a stock, there is also capital appreciation. Even i should say that more people buy stock for appreciation than for dividends.

(Capital appreciation is nothing but increase in price of share so that you can sell it at higher price)

Also, if dividend is not given this means that company is retaining earnings, which is a good thing and i have explained it in the next point.

2. The thing about retained earnings is that company retained(used) half of their earnings for capital expenditure, that will grow the business in long run. By capital expenditure i mean that they buy machinery or expand their factories capacity using that retained earnings.

In fact if retained earning is more this means that company is using most of its earning for expanding their business.

Hope it helps

They invest in stocks that do not pay a dividend because they believe the growth in the stock price will be their "source" of their return in the long run. Some investors believe that companies that pay dividends will not grow as fast as those that do not pay dividends.

Companies do not return all the earnings because they believe that have better uses for that cash. They will use it to make investments in equipment, people, machinery in order to grow the company even bigger. On a smaller scale, my small business only distributed 55% of our earnings this past year. We held the rest to invest in a new piece of equipment that we expected to purchase in order to generate an extra $80,000/month of revenue in 2014

1. Why people invest in stocks that doesn't pay any dividend?

2. Why sometimes company retained half of their earnings rather than distribute all of them?

thanks!