Growing stocks typically pay low dividends or zero dividends. This is because growing companies are growing at a very rapid pace and, therefore, they often want to reinvest their accumulated profits in the company to increase the company's income-generating capacity. Growing companies tend to show a significantly higher growth rate because they tend to have some kind of competitive advantage over other companies in the same industry. The competitive advantage offers growing companies a unique selling proposition (USP), which helps them to sell and grow better than other companies in the same industry.
Because growing companies enjoy a competitive advantage over other companies in the industry, they tend to enjoy a loyal and growing consumer base. The USP that these companies enjoy compared to their competitors ensures a constantly growing consumer base, contributing to their increasing growth rate. Because growing stocks pay very little or no dividends, investors don't get much out of their short-term investments. However, the long-term outlook is completely different.
Investors can generate substantial income through capital gains, after seeing growing companies experience double, triple or multiple growth over the years. Apple is another of the most sought-after growth stocks over the years. Apple has been able to achieve a continuous and increasing rate of growth at a very rapid pace, mainly thanks to a consumer base that is very loyal to the brand. The company oversees a brand that consumers want to affiliate with, not just a product, but the brand as a whole.
In addition, unique, high-quality products and constant innovation give Apple a competitive advantage over its competitors.
