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Why is a stock that pays a dividend preferrable to one that doesn't?
Dividend paying stocks are not "better"  In particular shareholders will get taxed on the distribution while the company can most likely invest the money tax free in their operations.  The shareholder then has the opportunity to decide when to pay the taxes when they sell their shares.   Companies pay dividends for a couple of reasons.... 1.) To signal the strength of the company. 2.) To reward the shareholders (oftentimes the executives of the firm get rather large rewards without having to sell shares they control.) 3.) If they don't have suitable investment opportunities in their field.  IE they don't have anything useful to do with the money.