Tag Archive: investors

Market finishes positive before it closes

by jscreationzs

The stock market had a bad opener this morning. It looked like today would be another day, the third market day in a row, where we would see a drop in the stock market. People were still worried about the bad news coming out of Europe and they feared the worst for Europe’s debt crisis.

Thankfully the worries have calmed down, for now at least. It has decreased the losses we have experienced recently and hopefully the worries keep going down. As I mentioned before, the mentality of investors can sway an entire market up or down just based on what they believe will happen. Right now, investors see a brighter future for Europe so the Global Economy is reaping the benefits.

We didn’t see huge gains in the market because all of the green came later in the market day. I actually didn’t even pay attention to the market for a good portion of the day because I was busy. When I first looked at the market, it was about 11am and the market was going down and it looked like it’ll keep going down due to fears about Europe. Then I come back at around 5PM (an hour after the market closes), and everything is in the green. It definitely surprised me, a good surprise.

The Dow Jones Gained almost 69 Points or just 0.6%. It wasn’t a huge gain but it was enough to get us past the 11,000 mark once again.  The lead isn’t that big, we need to keep seeing rises in the markets over the next few days to keep over the 11,000 mark and aim for the magic 12,000. Will it happen soon? Maybe, there is no way to predict which way the markets will go with the current level of volatility.

The NASDAQ Composite gamed over 27 points or just over 1%. It’s 5 points short of the 2,500 mark. The S&P 500 increased more than 8 points or 0.7%. And the NYSE barely saw an increase. It only rose just over 2 points, not even a tenth of a percent.

Today was not the best day for the stock market, but I’m glad the markets closed on a positive note. Let’s hope the good news keeps coming in. If President Obama’s stimulus proposal is passed by Congress, I’m sure we can see a rally by the stock market. And I also hope that if the package is passed, that it actually solves our problem rather than put another $450 billion hole in our already massive hole.

We’ll have to see how the market does for the rest of the week. Today was definitely shaky but it was a win nonetheless.

What are Stock Dividends?

Dividend Desk

Business by worradmu

A company pays dividends to investors as an incentive for investing with their company. This also attracts new investors, both individuals and other companies looking for a return on their investments. So what is a stock dividend? Our Stocks Vocabulary section states that a Stock Dividend “is a portion of a company’s profit given back to investors in either cash or stock value. Dividends are given out monthly, quarterly, semi-annually, and annually.” These are the most common schedules. Companies may not have dividend schedules at all, they may give out dividends only when they feel they don’t have any other use for the profits. And generally, companies will announce their dividends months before they actually give them out. They will also announce an ex-dividend date, also known as just an ex-date, and tied to it is the record date.

The ex-date is the first day a stock’s dividend is actually due. This means that if you want to be paid the next dividend by a company, you must purchase the stock before this date. If you purchase the stock on or after the ex-dividend date, you are not entitled to the next dividend payout. Why is that?

When you purchase stocks, they take time to settle. They won’t be recorded immediately. Even though the internet makes it easy for us to invest and buy stocks, it still takes time for purchases and sales to settle, it can take several days in fact. This is where the record date comes into play. Generally, the Record Date is two days after the ex-date. The record date is used by companies to determine which of their stockholders are entitled to their next dividend payout. If your name is not listed in their database or on their list of stock holders during the record date, you will not receive the next Dividend payout, even if you purchased the stock on the ex-date (2 days prior to the record date) because enough time hasn’t passed for your purchase to settle.

Dividends may seem complicated, but once you get used to the process, it’s actually quite simple. And from the above, you can deduct what will happen if you sell your stock on the ex-date. If you sell your stock on the ex-dividend date, you will receive the next dividend payout. Why? Well, as mentioned above, it takes time for orders to settle, and if you sell on the ex-date, your sale won’t be settled until after the record date. The company will still see your name on their list during the record date even though you may no longer own the stock and pay you the next dividend. Now if you sell the day before the ex-date, your order will most likely settle by the Record date and you will no longer be eligible to receive the next dividend.

Most company pay their dividends in quarterly schedules, or every 3 months for a total of four times a year. Some companies may have a semi-annual or even annual dividend schedule where they pay every 6 months or just once a year. A few companies also have monthly dividends that they pay at a certain time every month. Whatever the company’s schedule may be, the dividend announced is an annual dividend. For example, if a company announces a dividend of $1 per share, it means that they will pay out a total of $1 per share for the year. So if that company has a quarterly dividend schedule, you will get paid $0.25 per share every 4 months. If the company has a semi-annual schedule, then they will pay $0.50 per share every 6 months. The same goes for any other kind of schedule a company may have.

Companies that give out dividends will announce how much they will pay per share. And using that amount, you can figure out the total Yield of the dividend. The yield is just the  percentage of the dividend paid against the stock price. The value of the yield is far more dynamic than the value of the actual dividend.

For example, let’s say that you own 10 shares of Company Alpha with a worth of $10 per share. Let’s assume that Company A announced that they will pay $1 in dividends for each share per year. That’s a return of 10% and the 10% is the dividend yield.  So why is the yield dynamic? Let’s say 3 months from now, Company Alpha’s stock prices drop to $5 per share but they don’t change the amount they will pay in dividend. The dividend is still $1 per share, but now, the dividend yield is 20%. The amount of money you are getting back per share in dividends hasn’t changed, however the overall value of the stock has along with its dividend yield. The effect is the same if the stock value of Company Alpha rises to $20 per share, the yield at that point would be 5%.

As mentioned earlier in the article, dividends may also be paid out in stock value. Instead of getting cash, the company may give you extra shares of the stock depending on how much you own. Obviously, the more shares you own, the more shares you’ll earn during a dividend payout. This also results in some investors having decimal points in the number of shares they own. This isn’t better or worse than a cash payout. With a stock value payment, you won’t have to worry about paying taxes on your dividend, however, when you sell your stock, you will have to pay the taxes for the value of the share. There are advantages and disadvantages for each kind of payout so one isn’t better than the other.

Companies don’t have to give out dividends. Dividends are generally given out to encourage new investors. Companies that don’t have dividends aren’t necessarily bad, it could just mean that they are using their profits for the growth of their companies. Many companies use profits for Research and Development while others use the profits to invest in other companies to increase the value of their own company.

You shouldn’t only look at dividends when investing. You should also be careful about companies that give out too much dividends. You will come across companies that pay up to 50% of their stock value. It may not always have been a 50% yield, the price of the stock may have just dropped, but this stock is something people would call risky. The dividend would be extremely risky because there is a high chance the the company will either decrease their dividend payout greatly or cut it out altogether as some companies have had to do in the past to cut losses or stay in business. And if you purchased the stock because of its high dividend, you will be disappointed.

Stocks with 20-30% dividend yields are also somewhat risky. Although the risk is far less than a company paying out 50% in dividends, there is a big chance that the company will decrease their dividend amount in order to save the company money. Dividends should be a small factor in deciding what companies to invest with. You may get a bigger profit by investing a company that doesn’t give out any dividends but research shows that the company’s stocks will skyrocket because of a new product they are introducing or because the competition is doing poorly.

If you are looking at a dividend announcement by a company, be sure to really look at it for the essential information before assuming. You should look at how much dividend they are paying per share, what their schedule is, as well as the yield percentage because this can be a big indicator of how well a company may or may not be doing. Another thing to look at is the method of payment, whether it’s cash or sock value. Also be sure to pay attention to when the ex-dividend and record dates are so you don’t miss out on the next dividend payment.

 

Today was a very good day for the overall Stock Market. Stock prices rallied all day staying in the green zone from the start. The Dow Jones, Nasdaq Composite, and the S&P 500 saw huge gains in their stocks, hopefully signaling a positive and brighter future.

Dow Jones Rallying Graph

Dow Jones Graph August 23,2011 - Yahoo! Finance

The Dow Jones Industrial Average gained more than 322 points, finishing at over 11,176 points. It saw an almost 3% gain and for the Dow, 3% gain is huge. The market day actually ended with the Dow Jones finishing at it’s day’s high.

The NASDAQ Composite gained more than 4.25% and finished at 2,446 points. Just like the Dow Jones, Nasdaq finished at its highest point of the day. The S&P 500 gained almost 3.5% finishing at 1,162 points for the day. And again, the S&P 500 finishes at its highest point of the day.

Stocks have gone up for the second day in a row, and it’s giving investors hope that what we’ve gone through over the past few weeks of constant losses is over.

So what caused the stocks to rally so much today and should we worry?

The Federal Reserve Chairman Ben Bernanke is supposed to make an announcement later this week. Most investors are hopeful that it will be good news which will result in the stock market rallying even more in the near future. He may announce a new plan to help the struggling US Economy come out of the turmoil we have been seeing over the past few weeks.

We are all hoping that the news is good, but no one is really sure what he will say. Almost everything is a speculation and so far it’s working out great for investors and the stock market. We may see a similar updraft for the next few days until the announcement by Bernanke. Assuming the news is good, the stock market should see an even more increase over the few days following the announcement. We may actually have a chance to reach the 12,000 mark at the Dow Jones soon.

The market was lowering right after the earthquake hit earlier today at around 1:55PM EST. It’s epicenter was around Virginia but it was felt all over the East Coast, including here in New York City. I was actually getting part of this post ready when the earthquake started to shake my room. Before the earthquake, I was seeing the Dow Jones slowly go up over the 200 point mark. After the earthquake, it tumbled just below an overall increase of 150. But I’m glad the quake didn’t affect the market in a negative way. I’m also glad that the stock market rallied and the Dow Jones went over an increase of 300 points despite the different fears that may have gone through the minds of the general public.

What was negatively affected today, was the price of Gold. It wasn’t because of the earthquake, but because the economy was looking better today. The price of Gold actually surpassed the $1,900 mark earlier today, setting yet another record. But the price of gold didn’t stay up there. Today it took a tumble and fell away from its record of $1,909. The price of gold went down more than 62 points, finishing just under $1,826 an ounce.

If the stock market keeps going up over the next few days, I believe that we will continue to see the price of gold drop which could be a sign that the gold bubble is slowly bursting. On the other hand, since the price of gold has dropped more than 3% today, investors of Gold may actually see this as an opportunity to invest more in gold due to the slight discount they’ll be getting compared to the price it was over the past few market days.

Whatever happens with the stock market, gold will still remain very expensive. It’s still over $400 more than what it was when the year started.

Yesterday I mentioned a stock called Universal Display Corporation (PANL) and I pointed out it’s huge gain. Today, it saw another huge gain and rose almost 17%. It’s past the $40 mark and closing in on it’s 52 week high of over $63. Rentrak Corporation (RENT) also rallied today by showing a gain of almost 24% increasing the gap between it’s current stock price and its 52 week low. A stock from the technology sector called GT Advanced Technology (GTAT) Inc also saw a huge gain of more than 13.5% finishing at $11.46 today.

The three above companies are just a few examples of why the stock market is doing so well. Huge increases in stocks like these have been having a big impact on how the stock market has been doing over the past few days. I don’t own any shares in any of the companies mentioned but I do hope that it keeps up because I always like seeing companies do well whether I’m making any money or not.

Well, today was a great day for the stock market. All sectors have seen gains and the overall market closed with a big win today. Let’s hope that the gains continue over to the next few days and let’s hope that the coming announcement is a great one because we really need a break when it comes to our economy.