DIVIDENDS
Dividends are used by companies to share profits with their shareholders. The best-performing stocks in the S&P 500 over time have offered dividends to their shareholders. Dividends, compounded over time, can have a huge impact on the performance of your stock.
Reading more, beyond the bottom line...
Dividends can also be red flags to sell, sell, sell! Here's how...
First, what is a dividend and how is it different than a yield?
Dividend Amount - payments made by a publicly-traded company to its shareholders. It is the portion of profits that the board of trustees for a company issues through a proclamation (usually quarterly if an ongoing dividend) for each share of stock owned. These announcements usually follow the quarterly or annual earnings report, and also announce that the dividend amount is being increased, decreased or kept at the current level.
Dividend Yield - The dividend's yield is a simple calculation:
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Dividend Yield
= Dividend Amount (divided by) Current Share Price
Therefore, if the dividend is .25 per share (quarterly), making the total dividend $1.00 per share per year, and the current share price is $50.00, then the CURRENT Dividend Yield would be 2.0%.
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It is important to note that dividend amounts don't change daily, but dividend yield percentages do change constantly (based on a changing stock price).
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Stock Price goes up, Dividend Yield goes down. As the stock price goes up, the dividend yield will always go down, as a result. Likewise, the lower the stock price, the higher the dividend yield. In the above example, if the share price rose to $100, then the dividend yield would fall to just 1%. If the stock price fell to $25, then the dividend yield would go up to 4%.
Dividend boosts are a GREAT indication that a company is improving - You should be able to feel more confidence in that company's ability to deliver its earnings estimates (and therefore maintain or increase in stock price level). That is, a dividend increase most often equals SAFETY.
Dividends are used by companies to share profits with their shareholders. The best-performing stocks in the S&P 500 over time have offered dividends to their shareholders. Dividends, compounded over time, can have a huge impact on the performance of your stock.
Reading more, beyond the bottom line...
Dividends can also be red flags to sell, sell, sell! Here's how...
First, what is a dividend and how is it different than a yield?
Dividend Amount - payments made by a publicly-traded company to its shareholders. It is the portion of profits that the board of trustees for a company issues through a proclamation (usually quarterly if an ongoing dividend) for each share of stock owned. These announcements usually follow the quarterly or annual earnings report, and also announce that the dividend amount is being increased, decreased or kept at the current level.
Dividend Yield - The dividend's yield is a simple calculation:
?
Dividend Yield
= Dividend Amount (divided by) Current Share Price
Therefore, if the dividend is .25 per share (quarterly), making the total dividend $1.00 per share per year, and the current share price is $50.00, then the CURRENT Dividend Yield would be 2.0%.
?
It is important to note that dividend amounts don't change daily, but dividend yield percentages do change constantly (based on a changing stock price).
?
Stock Price goes up, Dividend Yield goes down. As the stock price goes up, the dividend yield will always go down, as a result. Likewise, the lower the stock price, the higher the dividend yield. In the above example, if the share price rose to $100, then the dividend yield would fall to just 1%. If the stock price fell to $25, then the dividend yield would go up to 4%.
Dividend boosts are a GREAT indication that a company is improving - You should be able to feel more confidence in that company's ability to deliver its earnings estimates (and therefore maintain or increase in stock price level). That is, a dividend increase most often equals SAFETY.
