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Google Inc (GOOG): Can This Company Keep Growing and Growing?

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Google Inc (NASDAQ:GOOG) reminds me of a monster in a 1950s horror movie; it just keeps growing and growing. Apple Inc. (NASDAQ:AAPL) might get all the respect and attention, but it’s Google that is growing at an astronomical rate these days. On May 17, 2013, Google’s stock had risen to $904. That’s right; Google shares topped the $900 mark for the first time.

This occurred on a day when the press was revealing some serious problems with Google’s latest gadget, the Google Glass. Discussion of Glass, which might be the “next big thing,” dominated coverage of the Google developers’ conference. Yet, even complaints that Glass’ security is a joke didn’t affect Google’s share value. Nothing, it seems, can stop Google Inc (NASDAQ:GOOG) from growing.

Google IncGoogle no friend to shareholders

What’s even more interesting is that Google’s share price keeps growing even though Google hasn’t distributed any earnings to its shareholders. Google Inc (NASDAQ:GOOG) has refused to pay a dividend even though it certainly has the cash to do so. Google had $50 billion in cash and short-term investments on March 31, 2013, and a yearly free cash flow of more than $12 billion.

Google Inc (NASDAQ:GOOG) could easily pay an annual dividend of $10 a share and still have cash to burn. Google would still be able to finance all the research it wants and make an incredible number of acquisitions while paying out a neat dividend.

Dividend might help Google

Paying out a dividend might actually help Google Inc (NASDAQ:GOOG) because it could raise its share value. Google’s stock might have a wider appeal if it offered a dividend as well as a high value. So we have to wonder what Google’s management is thinking; are they thinking that shareholders are like Google users? They will always come back no matter what, or is management waiting for the stock to fall so that a similar payout ratio can be achieved with a lower dividend amount?

Why Google offers no dividend

Google’s management has more cash to play with as long as they offer no dividend. At the end of the day, Google’s real power is cash; its ability to generate a lot of cash and hold onto that cash. In a way, that makes Google like Warren Buffett’s erkshire Hathaway Inc. (NYSE:BRK-B); its reason for being is to generate a lot of cash. The huge stash of cash gives Google power and makes us pay attention to it.

Don’t count on a Google dividend

In other words, a dividend just doesn’t fit into Google Inc (NASDAQ:GOOG)’s corporate strategy or culture. So don’t expect a Google dividend anytime in the future, or expect a Google dividend about the same time as the Berkshire Hathaway dividend. It won’t be coming even if it makes sense.

How long can the growth continue

So, how long can Google Inc (NASDAQ:GOOG) continue to keep growing and growing? The best answer is for the foreseeable future.

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