Say you have 6 shares of a company at $60 with a total run of $15.
- You can withhold and reduce your net value by $30 ($5 per share) and gain control of $150 in capital, for a net of $120 ($150 - $30).
- You can pay and increase your net value by $90 in dividends (6 shares paying $15 each) and $30 in stock appreciation (6 shares with $5 appreciation each) for a total of $120.
On first glance $150 is bigger than $120, and yes, it is actually bigger. But do you think you can do more with that $120 in your pocket to buy shares in companies that will buy and run trains and pay even more dividends and so forth…or is $150 in a treasury, which is not enough to buy a train, somehow better? (Remember: You can sell your shares in order to realise that stock appreciation so you can then flip that money into something even more profitable)
By the bye: You’ll often see experienced players selling down their companies, sometimes even until they only hold the bare presidency. Why? Because that company is exhausted, the money all spent and the trains soon to rust. They can buy paying shares in other companies (thus gaining those dividends and stock appreciation) while the sold shares also work for them by paying into the treasury – thus giving them double the money!
Commonly, the company also isn’t worth keeping hold of – a brand new company full of money is a better deal in every way. If someone wants to take it, bully for them – they can find and pay for a permanent train for it – otherwise all those shares in the pool will pay into the treasury when the company runs (partially resuscitating the company) and the shares will be nice and cheap to buy back in a future stock round after your money has been working for you more usefully somewhere else. And in the meantime there new companies full of money to float and help every other player’s trains to rust too…