Why not? If it's somewhat reliable (in the long run, averaged out), that's a ROI of 2.5%, which is not too bad I think.
No you don't.
Imagine a company that has a share price of 100$. And this company makes 10$ in profit, per share, and returns that 10$ in profits to shareholders every year in perpetuity.
Thats a 10% rate of return that investors would be happy to accept in perpetuity.
People accept this deal all the time. Usually they are called "bonds" or "loans", and they act as merely an a perpetuity cash payout.
It isn't, because it's not compound interest (exponential growth), which is what everyone is after--and needs, to beat inflation. It's a fixed revenue stream. To make it compound, one would have to reinvest the return in this stock or something else, and reinvesting in this stock would increase its demand, which pushes its price up, and then we're off to the races again.
The whole system is mathematically unstable. It's only survived this long due to slow(ish) growth, but it keeps experiencing repeated price shocks, crashes, currency rebases, debt defaults, and finally issuing new currencies (which, btw, is why everyone is going nuts over crypto currencies). It can last quite some time--perhaps a couple generations--when the exponents are very low (read: < 3%), but when the exponents are high (i.e. companies shooting for > 10% growth), this thing is going off the rails. Welcome to the show!
There's quite literally a word for low growth but reliable stocks that pay out decent dividends. "Value stocks", as opposed to "Growth stocks" where investors expect to see the returns directly in the stock price.
I do think shareholders are more than happy to see 10-20% in dividend returns annually. They're able to buy more stocks or diversify accordingly. I'm also okay with growth and reinvestment internally in a company (that tends to grow stock value). And it isn't an either/or issue.
What I don't think is reasonable is to see a given company try to get consistent growth in saturated markets they heavily control. It doesn't work, and trying to do so leads to horrible decision making in the longer term.
Continuous growth is sustainable at or below world economic growth. It is obviously not sustainable above as eventually you would become the entire economy and thus you would equal world economic growth. However, economics is not zero sum as our economies have pretty continuously grown for centuries and there is no limit on economic growth.
This is not true at all.
There are lots of companies out there that make a profit, and return those profits to shareholders via dividends.
If google wants to just continue making profits, they can just do that, and send that money back to the shareholders/owners, just like most every other company out there.
Hey, feel free to invest your retirement savings in a company that doesn't grow profits year after year, I'm sure you'll do great!
We would need to rework the whole system if we threw out the "constant growth" method of running a company. If we take care of the people so they don't have to worry about saving for retirement, it's possible to redesign the economy in this way and our goals as a society.
You obviously can't change one major axiom of the US economy without revisiting the remaining axioms!
Sustainability is more important than growth.
Yep, their value never changes, which means that if you invested your savings in them, you'd get no returns.
Tell me, where do you invest your retirement savings?
No, it is the opposite. The return on investment is measured by the value of the business.
But I'm not getting your point, are you suggesting that Google should be a charity?
Would you invest your retirement savings on a charity that will return 0%?
Not if such executives have controlling interest, which Google's execs do.
It is like a treadmill that keeps increasing speed. If you slow down, you are thrown out.
If consecutive quarterly results are not good, CEO is typically thrown out. This pressure forces management to make unnatural decisions that might help short-term, but will hurt long-term. What we are seeing with Google with all of these recent events/decisions is a result of this, IMO.