AAII Survey: Would You Invest $10,000 in the Stock Market Right Now?

It seems that the U.S. stock market has moved passed December’s abysmal performance, at least for now. Nearly half-way through January, the iShares Dow Jones U.S. ETF (IYY) is up nearly 11% from its Christmas Eve low. In fact, through the close on January 9, the Dow Jones industrial average and S&P 500 index had logged their…

 

Common Stock Dividends: What Are They Worth?

The thought of dividends excites some investors to a point of financial ecstasy while moving others to bouts of slumber. Some investors seek only common stocks with high and predictable dividend payments, and other investors search out stocks with exceptional growth potential, eschewing those that pay any dividend. There are a series of dividend issues…

 

The Role of Leverage and Quality in Dividend Changes

Dividend increases are typically met with a positive reaction from investors, while dividend cuts are typically met with a negative reaction. Whether these changes signal positive or negative information, however, depends on the quality of the company and its leverage. Companies with low-to-moderate levels of leverage—defined as liabilities to total assets—can signal positive information by…

 

AAII Survey: Dividend Reinvestment Plans (DRIPs)

Dividend reinvestment plans or DRPs/DRIPs are offered by many companies to give shareholders the option of reinvesting the amount of a declared dividend by purchasing additional shares. Normally, when dividends are paid, they are received by shareholders as a check or a direct deposit into their bank account. Because shares purchased through a DRIP typically come from…

 

Defining Yield: A Word of Many Meanings

The term “yield” is thrown about often by the financial press and others. The trouble is that yield has many different meanings and implications for investors. This workshop will try and sort out some of the major differences. It will not, however, attempt to present mathematically all of the possible yield calculations created by institutions…

 

Who Gets a Dividend Payment After a Trade?

Companies distribute cash dividends to their shareholders at the discretion of the board of directors. The board of directors examines the business prospects, cash generation and cash needs to determine if they can afford to make a distribution of profit in the form of a cash dividend and how large a distribution to make. Most…

 

Investors Prefer Dividend-Paying Companies in Market Downturns

It may not be comforting, but individuals are rewarded over the long term for investing in stocks because stock prices can go up or down. Short-term market volatility and uncertainty creates a risk premium to entice investors to buy and hold stocks. It is important to note, however, that all stocks do not react equally…

 

Dividend Yield as a Valuation Measurement

Value investors are always seeking undervalued stocks to add to their portfolios while pruning those that are overvalued. However, a stock’s price doesn’t always reflect a company’s true value. The dividend yield is a useful measure of value for selecting undervalued securities and pruning overpriced stocks from your portfolio. A stock’s dividend yield is computed…

 

Screening With the Big, Safe Dividend Formula

Many investors seek income to supplement their portfolio returns while at the same time insulating themselves from market declines. In “The Little Book of Big Dividends: A Safe Formula for Guaranteed Returns” (John Wiley & Sons, 2010), Charles Carlson outlines a recipe for investment success: “Find stocks with above-average appreciation potential and safe and growing…

 

Qualified Versus Non-Qualified Dividends and Examining a Dividend’s Safety

For many investors, dividends are an excellent means of generating income for their portfolio. Depending on where you are in your investment lifecycle, you may reinvest those dividends or you use the income on various expenses. AAII Weekly Survey Question However, depending on the type of dividend being paid, you may face different tax considerations….