Last Updated on 06/29/2021 by GS Staff
Q: Does Netflix pay dividends?
No, Netflix does not pay dividends. Netflix is currently focused on growth. They are concentrated on growing internationally, increasing memberships, and accelerating their original programming. The money that Netflix earns through subscriptions is used to fuel this growth.
Netflix’s growth strategy is confirmed if you read the latest 2019 annual report. In the report they indicate the following:
We are expanding our operations internationally, scaling our streaming service to effectively and reliably handle anticipated growth in both members and features related to our service, ramping up our ability to produce original content, as well as continuing to operate our DVD service within the U.S.
Will Netflix Pay Dividends in the Future?
There is no indication that Netflix will pay a dividend any time soon. Money earned is going towards growth as management sees this as the best path for shareholders. The 2019 annual report indicates that the company has no immediate plans to pay a dividend. Per the report:
The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option valuation model. The Company does not use a post-vesting termination rate as options are fully vested upon grant date.
Why No Dividend is Currently Good
Netflix needs to continue to grow in order to succeed. Adding customers domestically and internationally means that the company can continue to create original content and add shows to the mix. If the content remains strong, additional people will join and existing customers will stay on board. Paying out dividends means less money that will go toward expansion since this money will have gone to shareholders. Netflix shareholders should currently focus solely on a potential stock price increase for their return. Of course, there is no guarantee of a return, and loss can occur.