A way of attracting new investors
Dividend as a phenomenon emerged during the 19th century due to expectations from investors linked to coupons or cash payouts from their investments. Most likely, this happened since the stock market back then was young in comparison to the bond market, and that the presumption then was that stocks would work in the same way as bonds. With this as a basis, companies had no choice but to start handing out cash to shareholders. Therefore, you could say that companies used dividends as a way of attracting new investors; "look here, our share works much like a bond!”
High status among investors
This being the catalyst, companies that distribute money to shareholders have gained cult followings and high status among investors. Linked to this, the terms dividend aristocrats and dividend kings have become widely used and well-recognized among investors. Dividend aristocrats are stocks included in the S&P 500 that have increased their dividends for at least 25 consecutive years, which of course, is a great achievement. However, dividend kings are even more prestigious as they must reach a streak of at least 50 consecutive years of dividend growth.
Acknowledgment of a company’s profitability
Even though dividend per se does not create value, but rather moves money from one pocket to another, several surveys show that both dividends aristocrats and dividends kings have outperformed the market over time. This is unquestionably reasonable, as dividends act as an acknowledgment of a company’s profitability and thus serve as verification for the quality of a business.