DIVIDEND

1. A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. The dividend is most often quoted in terms of the dollar amount each share receives (dividends per share). It can also be quoted in terms of a percent of the current market price, referred to as dividend yield.

Also referred to as "Dividend Per Share (DPS)."

2. Mandatory distributions of income and realized capital gains made to mutual fund investors.

(i) Dividends may be in the form of cash, stock or property. Most secure and stable companies offer dividends to their stockholders. Their share prices might not move much, but the dividend attempts to make up for this.

High-growth companies rarely offer dividends because all of their profits are reinvested to help sustain higher-than-average growth.

(ii) Mutual funds pay out interest and dividend income received from their portfolio holdings as dividends to fund shareholders. In addition, realized capital gains from the portfolio's trading activities are generally paid out (capital gains distribution) as a year-end dividend.

The Importance of Dividends
One of the simplest ways for companies to communicate financial well-being and shareholder value is to say "the dividend check is in the mail." Dividends, those cash distributions that many companies pay out regularly to shareholders from earnings, send a clear, powerful message about future prospects and performance. A company's willingness and ability to pay steady dividends over time--and its power to increase them--provide good clues about its fundamentals.







Dividends Signal Fundamentals
Before corporations were required by law to disclose financial information in the 1930s, a company's ability to pay dividends was one of the few signs of its financial health. Despite the Securities and Exchange Act of 1934 and the increased transparency it brought to the industry, dividends still remain a worthwhile yardstick of a company's prospects.

Typically, mature, profitable companies pay dividends. However, companies that do not pay dividends are not necessarily without profits. If a company thinks that its own growth opportunities are better than investment opportunities available to shareholders elsewhere, the company should keep the profits and reinvest them into the business. For these reasons, few "growth" companies pay dividends. But even mature companies, while much of their profits may be distributed as dividends, still need to retain enough cash to fund business activity and handle contingencies.

The progression of Microsoft through its life cycle demonstrates the relationship between dividends and growth. When Bill Gate's brainchild was a high-flying growth company, it paid no dividends, but reinvested all earnings to fuel further growth. Eventually, this 800-pound software "gorilla" reached a point where it could no longer grow at the unprecedented rate it had maintained for so long. So, instead of rewarding shareholders through capital appreciation, the company began to use dividends and share buybacks as a way of keeping investors interested. The plan was announced in July 2004, nearly 18 years after the company's IPO. The cash distribution plan put nearly $75 billion worth of value into the pockets of investors through a new $0.08 quarterly dividend, a special $3 one-time dividend, and a $30 billion share buyback program spanning four years.

The Dividend Yield

Many investors like to watch the dividend yield, which is calculated as the annual dividend income per share divided by the current share price. The dividend yield measures the amount of income received in proportion to the share price. If a company has a low dividend yield compared to other companies in its sector, it can mean two things: (1) the share price is high because the market reckons the company has impressive prospects and isn't overly worried about the company's dividend payments, or (2) the company is in trouble and cannot afford to pay reasonable dividends. At the same time, however, a high dividend yield can signal a sick company with a depressed share price. For more on this subject, check out the Dogs of the Dow section in the "Guide to Stock Picking."

Dividend yield is of little importance for growth companies because, as we discussed above, retained earnings will be reinvested in expansion opportunities, giving shareholders profits in the form of capital gains (think Microsoft).

Dividend Coverage Ratio
When you evaluate a company's dividend-paying practices, ask yourself if the company can afford to pay the dividend. The ratio between a company's earnings and net dividend paid to shareholders--known as dividend coverage--remains a well-used tool for measuring whether earnings are sufficient to cover dividend obligations. The ratio is calculated as earnings per share divided by the dividend per share. When coverage is getting thin, odds are good that there will be a dividend cut, which can have a dire impact on valuation. Investors can feel safe with a coverage ratio of 2 or 3. In practice, however, the coverage ratio becomes a pressing indicator when coverage slips below about 1.5, at which point prospects start to look risky. If the ratio is under 1, the company is using its retained earnings from last year to pay this year's dividend.

At the same time, if the payout gets very high, say above 5, investors should ask whether management is withholding excess earnings, not paying enough cash to shareholders. Managers who raise their dividends are telling investors that the course of business over the coming 12 months or more will be stable. For instance, when Kimberly Clark, the giant of personal care products, increased its dividend by 13% in the first quarter of 2003, the company was telling investors that the punishing price war with Proctor & Gamble was not a long-term problem. The signal was even stronger because KC said it intended to increase its dividend further over the following five years.

The Dreaded Dividend Cut
If a company with a history of consistently rising dividend payments suddenly cuts its payments, investors should treat this as a signal that trouble is looming. Texas Utilities, for instance, once recognized for its consistent payouts, was among the highest-yielding stocks available. Then in 2002, the company cut its quarterly dividend, and the stock price plummeted by nearly a third in a single day.

While a history of steady or increasing dividends is certainly reassuring, investors need to be wary of companies that rely on borrowings to finance those payments. Again, take the utilities industry, which once attracted investors with reliable earnings and fat dividends. As some of those companies were diverting cash into expansion opportunities while trying to maintain dividend levels, they had to take on greater debt levels. Watch out for companies with debt-to-equity ratios greater than 60%. Higher debt levels often lead to pressure from Wall Street as well as debt-rating agencies. That, in turn, can hamper a company's ability to pay its dividend.

Great Disciplinarian
Dividends bring more discipline to management's investment decision-making. Holding onto profits might lead to excessive executive compensation, sloppy management, and unproductive use of assets. Jarad Harford, professor of finance at University of Oregon, finds that the more cash a company keeps, the more likely it will overpay for acquisitions and, in turn, damage shareholder value. In fact, companies that pay dividends tend to be more efficient in their use of capital than similar companies that do not pay dividends. Furthermore, companies that pay dividends are less likely to be cooking the books. Let's face it; managers can be awfully creative when it comes to making earnings look good. But with dividend obligations to meet twice a year, manipulation becomes that much more challenging.

Finally, dividends are public promises. Breaking them is both embarrassing to management and damaging to share prices. To tarry over raising dividends, never mind suspending them, is seen as a confession of failure.

A Way to Calculate Value
Dividends can give investors a sense of what a company is really worth. The dividend discount model is a classic formula that explains the underlying value of a share, and it is a staple of the capital asset pricing model which, in turn, is the basis of corporate finance theory. According to the model, a share is worth the sum of all its prospective dividend payments, 'discounted back' to their net present value. As dividends are a form of cash flow to the investor, they are an important reflection of a company's value.

It is important to note also that stocks with dividends are less likely to reach unsustainable values. Investors have long known that dividends put a ceiling on market declines.

UNDERSTANDING STOCKS FINANCIAL TABLE

Introduction

Many new investors/traders are intimidated by the financial tables they see on the sites when they search for a stock's updates and history. It's easy to see why. These tables pack a lot of information into a small space and can be complicated unless you know what you are looking for.


Learning how to read these tables will help you keep track of your portfolio's performance. This lecture will take you through six of the most popular financial tables and tickers you see in newspapers, on television and on the Internet.

We will focus on how to interpret the data.

Open any financial paper or quote for any stock today and you will see stock quotes that look something like the images below. In this section, we'll explain how to make sense of these tables so that you can use the information to your advantage.







Let's take a look at the stock/quotes tables:

No.1

No.2

we are gonna look at No.1 as a case of study

On photo No.1,

Columns 1 & 2: 52-Week High and Low. These are the highest and lowest prices at which a stock has traded over the past 52 weeks (1 year). This typically does not include the previous day's trading.

Column 3: Company Name and Type of Stock. This column lists the name of the company. If there are no special symbols or letters following the name, it is common stock. Different symbols imply different classes of shares. For example, "pf" means the shares are preferred stock.

Column 4: Ticker Symbol. This is the unique alphabetic name which identifies the stock. If you watch financial TV, the ticker tape will quote the latest prices alongside this symbol. If you are looking for stock quotes online, you always search for a company by the ticker symbol. If you don't know a particular company's ticker symbol, you can search for it at Yahoo Finance.

Column 5: Dividend Per Share. This indicates the annual dividend payment per share. If this space is blank, the company does not currently pay out dividends.

Column 6: Dividend Yield. The percentage return on the dividend, dividend yield is calculated as annual dividends per share divided by price per share.

Column 7: Price/Earnings Ratio (P/E ratio). This is calculated by dividing the current stock price by earnings per share from the last four quarters. (we shall later look at P/E ratio in a more comprehensive way)

Column 8: Trading Volume. This figure shows the total number of shares traded for the day, listed in hundreds. To get the actual number traded, add two zeros to the end of the number listed.

Column 9 & 10: Day High and Low. This indicates the price range in which the stock has traded throughout the day. In other words, these are the maximum and the minimum prices that people have paid for the stock.

Column 11: Close. The close is the last trading price recorded when the market closed on the day. If the closing price is more than 5% above or below the previous day's close, the entire listing for that stock is bold-faced. Keep in mind, you are not guaranteed to get this price if you buy the stock the next day because the price is constantly changing, even after the exchange is closed for the day. The close is merely an indicator of past performance and, except in extreme circumstances, it serves as a ballpark of what you should expect to pay.

Column 12: Net Change. This is the dollar value change in the stock price from the previous day's closing price. When you hear about a stock being "up for the day," it means the net change was positive.

Quotes on the Internet
Nowadays, it's far more convenient for most people to get stock quotes on the internet. This method is superior because most sites update throughout the day and give you more information, news, charting and research.

To get quotes, simply enter the ticker symbol into the quote box of any major financial site like google finance, Yahoo Finance, CBS Marketwatch, or Quicken.com.  The data qouted can also be interpreted exactly as it would if it were from the newspaper.

Stock Ticker

If you've ever a watched financial program on CNBC or CNNfn, you've probably noticed the numbers scrolling along the bottom of the TV screen. These are known as stock tickers, a technology that has evolved substantially since it was invented in the late 1800s.



Ticker Symbol , This refers to the unique characters that are used to identify the company.
Shares Traded ., This is the volume of the trade being quoted. Abbreviations are K = 1,000, M = 1,000,000 and B = 1,000,000,000
Price Traded , The price per share for the particular trade.
Change Direction , Shows whether the price was higher or lower than the previous day's closing price.
Change Amount , The difference in price from the previous day's close.

On many tickers, colors are also used to distinguish the price at which the stock is trading. Here is the color code used by most TV stations:

Green: indicates that the stock is trading higher than the most recent close.

Red: indicates that the stock is trading lower than the most recent close.

[b]Blue or White[/b]: means that the stock has remained at the most recent closing price.


Because there are literally millions of trades done on more than 10,000 different stocks every day, it's impossible to report every single trade on the ticker tape. Most ticker tapes will select which trades to show based on factors such as volume, trading activity, price change and how widely a stock is held.

CONCLUSION

It is only those that understands the language of the singer can sing the corus with him, but i believe we all can sing along with me, right?

I strongly believe that this tutorial will serve as an eye opener to every beginner trader and many oldbies that has the fliar to interpret what he/she sees when they research but do not have the Know-How to do so.



, Happy Trading!

Bros well done.
How much can one start with for trading.
07030150608/ lordsusulu4real@yahoo.com

@ D-broker,

Trading global stocks through PectStocks requires just about N48,300 (forthy eight thousand three hundred niara only),

The breakdown of the N48,300 goes like this:

(1) Membership Fee: N16,000, PectStocks is actually built for the members of the PECT Community only, so who ever wants to trade global stocks via Pectstocks MUST be a member first by paying the membership fee.

(2) Minimum startup Deposit: $250 dollar which is equivalent to N30,000 plus its 1%, making it N30,300. The 1% is the transfer charge that is required by in the intermediary banks to facilitated your transfer abroad cos all funds are transfered abroad before it could be seen in your trading account.

cheers.

(3) A N2000 Telex charge been charged by our local banks for transfering your money abroad.

BENEFITS FOR BEING A PECT MEMBER

The PectOline Community has a variety of benefits brought together for its paid members, some important ones are listed below:

Pect Partnership (A Profitable Marketing Program)
Forum (Investment Resourceful Portal)
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CALCULATING PERCENTAGE GAIN OR LOSS IN STOCKS TRADING

Trading stocks of any kind without knowing how to interpret your returns is unprofessional and so confusing so am going to let us have the formula with which to calculate it.

Finding the total percentage gain or loss on a portfolio requires a few simple calculations. First, you should understand how percentage gains or losses are found on an individual security. To calculate the gain, subtract the current price or the price for which you sold the stock from the price that you initially bought it. Now that you have your gain, divide the gain by the amount of the stock. Finally, multiply your answer by 100 to get the percentage change in your investment.

For example, on June 1, your portfolio is valued at $14,500. After a week of market activity, your portfolio value increases to $15,225. Your percentage return on your portfolio for the week is 5% ( ($15,225 - $14,500)/$14,500 X 100).


Here is what the formula looks like:

Percentage return = your selling or current price - (minus) your initial buying price / (divided) by your initial buying price again X (multiplied) by 100.

If the percentage is negative, resulting from the market value being lower than the book value, you have lost on your investment. If the percentage is positive, resulting from market value being greater than book value, you have gained on your investment.
I do hope this helps us.

…………………, Happy trading!

Do u know i'm confuse!

Why the confusion ztyle? have you been pondering where the world is pushing you? or are you confused on what investment vehicle you re to invest in?, what really is your problem pally?, this is a discussion board where anyone is free to express his/her self share and get their problem solved, so let's have ur expression.

What's wrong with the threaded, it as been unattended to since 2008.

I need help, a mentor/tuitor cos I want to start trading.

eastern:
getting started with global (online) stocks trading

Only Two Things Needed To Start Trading

* Money
* Broker

Getting Started In Stock Trading

If you're unfamiliar with trading on the stock market, this page is for you. For those who have never bought a stock, but have some money they'd like to invest, we've put together this quick overview to help you get started.
Brokerage Accounts

Every investor needs a stock broker to handle buy and sell orders. The first step is to decide which kind of firm will work best for you. Do you need one that offers full service, or can you go with a discount brokerage firm? Please read on and decide.
Full Service Stock Brokers

The advantage of a full service account is that you'll get more personalized attention. The broker will understand what your investment goals are and can offer recommendations on what and when to buy and sell. However, because their commissions can run as high as $100 a trade, this type of account works best for those with high net worth and/or minimal trading activity.

most full service brokers are not a good fit if you want to trade in penny stocks because you'll be investing smaller amounts of money and doing it more frequently. The high commission fees involved would take a huge bite out of your potential profits. Instead, we recommend using a discount brokerage firm.
Discount Stock Brokers

Discount brokers do not offer the same level of service, but they're still available to answer your questions. You've probably seen the television ads for firms that execute trades for the low fee of ten or twenty dollars. With commissions that low, naturally it's going to leave you with more money to work with.

Other discount brokerage advantages include online account access via computer or an automated telephone system. From your computer, you can monitor your account activity, keep track of open orders, and get relevant market information and stock quotes. This is a great benefit to penny stock investors because of the 24/7 access, one very good example of discount brokers is www.pectstocks.com .

Pect stocks is a Nigerian based global stocks broker that have their head office in the US, surprise? Pect stocks is a global (online) stocks broker that has one of the most robust trading platform that gives you the access to stock market of about 57 countries in the world. with Pect stocks you can research for any stock in the world and with them in Nigeria, you can trade DOW JONES, NASDAQ, S&P 500 and any type of stock you can think of.

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Bump.