It doesn't need to pay a dividend now. It doesn't need to pay a dividend tomorrow, but if it never pays a dividend until the day it dies, it is a Ponzi scheme. Let's use an example to solidify (real life example.)
Definition of a Ponzi scheme: Investor A makes money off investor B. Investor B makes money off investor C. Investor C is a bagholder. See image 1.
Real life example: https://www.youtube.com/watch?v=EjOamcE0ahE&t=551s Ticker: MSN Emerson radio
You don't need to watch the video. I will explain everything right here.
How do you make money from stocks? Either through capital appreciation or dividends. Let's ignore capital appreciation because it's just another investor paying you more for it (Ponzi scheme.) That means the only way to derive value from a company is through its dividends. Dividends is what you get from the company. The company gives you cash from its balance sheet. What happens if a company has a $1 billon in cash but never gives it away as dividends and never intends to? The value of the cash might as well be zero (even if it gets acquired, the parent company won't give you a dividend either. Got 'em!). How does this happen you may ask? Easy. Insiders own 60% and never issue a dividend, rather milk the company through salary (see listed video.)
What about stock buyback? Isn't that the company giving back to its shareholders--- yes as long you are one of the guys selling your shares to the company. Otherwise no. If you keep holding your shares, it's a waste. It's a Ponzi scheme. The only way you can make money is if you sell it another fool at a higher price.
You may not understand this concept thoroughly because I did not explain it right. But you better know it, it is essential. Many people don't know and they fight with me on reddit.
That means the money they got from their IPO is essentially free money they never have to repay (good deal! Where do I get that?)
That's why when I see a cyclical company that never pays a dividend, I cringe. Ponzi scheme *100.
Appendices:
Image 1. Sorry bud. You're the bagholder.
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