Why would anyone want to own a company that would never pay a dividend?

Speaking personally, as someone who hasn't owned shares in a dividend-paying company for about 10 years:

a) expectation [well-founded to date] of growth, leading to capital gains
b) potential for a company selling itself, creating a capital gain
c) not as much need for a company to pay underwriters to sell new shares because it has retained it earnings to fund its investment programme
d) my investment is completely tax-free and charge-free inside an ISA, so there is no leakage of my entitlement to a share of the company's earnings


And if I need a bit of cash then I simply sell some shares.

The paying of dividends is ENTIRELY a matter of management discretion [as I suspect we'll see when the banks publish their interims]. Obviously no-one would own shares in a company that would never make a profit.....but thats not what you were suggesting!

I take the view that if a company is worth investing in then I should be happy to have the earnings rolled up and save on admin and underwriting costs, rather than paid out in dividends. And if/when the company is sold on to new owners, it will be up to them whether they continue to reinvest in the business by retaining all their earnings, or whether they pay it out to shareholders in dividends, share buybacks etc.......

......but I can't see why it should be automatically considered attractive to invest in a company that is continually weakening its financial position by paying dividends out to shareholders. It is, IMO, a tacit admission that growth opportunities are limited. And it is also dangerous for shareholders to come to rely on a dividend stream that can potentially be withdrawn or slashed at the whim of the board!

In sum, dividends are a greatly over-rated attribute of shares.

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